MOSCOW (AP) _ President Boris Yeltsin has set up a new bankruptcy system, clearing the way for the sale of insolvent state-run enterprises to private owners, his office said Thursday.

Yeltsin's decree assigns the Federal Department for Insolvency Affairs, a unit of the State Property Committee, to identify failing enterprises and decide their future.

Russia's economic reforms have been impeded by the inability to put loss- making state enterprises out of business. The companies continue to drain the state budget and use valuable resources.

The new decree says businesses found to be insolvent can be liquidated, restructured or transferred to other owners, including the private sector.

The insolvency department also will represent government interests in bankruptcy cases involving state enterprises or businesses with government shares.

In all, 8,000 Russian enterprises could be declared bankrupt, Interfax news agency said.