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Bankruptcy under Russian law

Bankruptcy law is an area of law with extremely complex and intricate legal provisions, which requires the assistance and advice of dedicated professionals. The dedicated Bankruptcy Practice at «Consul & Rubicon» is distinctive from other law firms.

Our experience shows that, in order for assets to be recovered, it is not sufficient for creditors to rely on bona fide performance by bankruptcy trustees of their duties. Actual recovery of money may be facilitated only by one’s own proactive defence.

Engaging experts to represent parties in bankruptcy proceedings helps to efficiently address and solve problems, taking into account the numerous legal conflicts existing in the Law that surface only through litigation.

Presently, the «Consul & Rubicon»’s attorneys possess vast practical experience, are equipped with knowledge of a variety of methods to counter unscrupulous debtors and protect parties to bankruptcy proceedings, and have document templates allowing for prompt response to any changes in bankruptcy procedures and saving client’s time.

Practically every bankruptcy case we worked on stretched far beyond the bankruptcy court proceedings themselves. The objectives of each of these projects are to: untangle the schemes used to siphon off money or other debtor’s assets; dispute dubious transactions made by the debtor on the eve of bankruptcy; take action against managers and owners and other steps.

The remedies that the «Consul & Rubicon»’s experts may use include, but are not limited to, the following:

-drafting and filing petitions for debtor's bankruptcy;

-including a creditor in the register of creditor claims;

-disputing claims made by unscrupulous creditors;

-participating in creditors’ meetings/ committee meetings;

-objecting to debtor’s financial standing analysis, opinions confirming absence of premeditated bankruptcy signs;

-reporting crimes in connection with bankruptcy proceedings to law enforcement authorities;

- legal representation in court;

- inventory-taking of the debtor’s property;

- selection of a candidature of the court-appointed manager, control of his activities;

- negotiations between the parties with the purpose of conclusion of the amicable settlement agreement;

- collection of the accounts receivable to the debtor;

- organization of competitive bidding.

The main sources of legal regulation relating to bankruptcy in Russia are the following:

Part 1 of the Civil Code of the Russian Federation as of November 30, 1994 (hereinafter referred to as the "Civil Code of the RF");

the Federal Law No.127-FZ dated October 26, 2002 "On Insolvency (Bankruptcy)" (hereinafter referred to as the "Law on Bankruptcy");

the Federal Law No.40-FZ dated February 25, 1999 "On Insolvency (Bankruptcy) of Credit Organizations".

An insolvency (bankruptcy) is an inability, which has been recognized so by an arbitration, of a debtor to satisfy in full the claims of his creditors relating to financial liabilities of that debtor and/or to settle the mandatory payments.

An individual, including sole entrepreneurs or legal entities, is deemed to be a debtor if that person is not capable to satisfy the claims of the creditors relating to financial liabilities of the said person and/or if that person fails to settle the mandatory payments within a period as provided for by this Federal Law. However, at the present time, the legal norms, which relate to individual who is not a private entrepreneur, do not apply and therefore only a legal entity or a private entrepreneur may be declared bankrupt.

A legal entity is deemed to be incapable to satisfy the claims of the creditors relating to financial liabilities of that entity and/or to settle mandatory payments if the respective satisfaction of claims or settlement of mandatory payments have not been effected within a period of three months from the date, on which such satisfaction of claims or a mandatory payment should have been effected.

Taking into consideration the given indicators, a bankruptcy case may be instituted by an arbitration only provided that the claims in respect of an indebted legal entity represent, in total, not less than one hundred thousand Rubles, and such claims in respect of an indebted individual represent not less than ten thousand Rubles accordingly.

The claims in respect of a debtor shall, as a rule, be confirmed by a court decision being in effect or by decision of respective state authority.

A debtor, a bankruptcy trustee and an authorized bodies are entitled to submit an application to arbitration in order that a debtor be declared bankrupt.

Bankruptcy trustees mean any creditors in respect of whom the financial liabilities have arisen, except for the authorized bodies or individuals to whom a debtor is liable for the damage to life or health, or is responsible to pay remuneration to the authors of the results of intellectual activities, or the founders (participants) of a body indebted in relation to liabilities arising out of such participation;

Authorized bodies mean the Federal Taxation Service, the executive bodies of constituent entities of the Russian Federation, the municipal authorities that are authorized to be representatives at the bankruptcy case and during the procedures, which are applied in the course of such bankruptcy case, and to submit claims in relation to financial liabilities that are due to constituent entities of the Russian Federation and the municipal entities accordingly.

A debtor has right to submit a debtor's application to arbitration if such debtor anticipates a bankruptcy and provided that there are circumstances that give an express evidence of that a debtor will be unable to discharge the financial liabilities and/or settle the mandatory payments in a period specified.

The Law on Bankruptcy provides for the cases where a chief officer of a body indebted or a private entrepreneur must submit a debtor's application to arbitration. If that chief officer fails to meet this obligation then the said officer will bear, jointly with a debtor, a subsidiary liability (Clause 2, Article 10, Law on Bankruptcy).

The following procedures are applied in the course of consideration of debtor's case, whilst a debtor is a legal entity:

supervision – a procedure, which is applied in the course of bankruptcy proceedings to a debtor in order to secure a debtor's property, to carry out the analysis of a debtor's financial standing, to prepare a register of that debtor's creditors' claims and hold the initial meeting of creditors;

financial sanation – a procedure, which is applied in the course of bankruptcy proceedings to a debtor with a view to recover that debtor's solvency and to repay debts in accordance with a schedule of debts repayment;

external management – a procedure, which is applied in the course of bankruptcy proceedings to a debtor in order to recover that debtor's solvency;

receivership – a procedure, which is applied in the course of bankruptcy proceedings to a debtor that has been declared bankrupt with a view to a proportioned satisfaction of the creditors' claims;

amicable settlement – a procedure, which is applied in the course of bankruptcy proceedings at any of its stage with the purpose of termination of the proceedings by way of reaching an agreement between a debtor and its creditors.

If a debtor under bankruptcy proceedings is an individual then the following procedures apply:

receivership;
amicable settlement;
other procedures as provided for by the Law on Bankruptcy.


«Consul & Rubicon» specialists are ready to render all types of professional legal services regarding insolvency and other adjacent spheres, including:

Consulting liquidators (or all-inclusive support of insolvency/bankruptcy proceedings);

Consulting and representing interests of insolvent debtors’ creditors during insolvency procedures;

Protecting debtors’ interests during insolvency procedures;

Developing possible procedures of restructuring obligations and existing measures for securing performance of obligations in compliance with bankruptcy laws.

Call us or make an appointment to get free advice from our expert.

Postcode 404130 Russian Federation,
Volgogradskaya oblast, city Volzhskiy
Lenin Avenue Building 20 office 11
(Office Center "Staraya Ploshchad")

Call us: office phone +7 (8443) 41-28-81
mobile phone +7-902-362-70-56
Contact us: e-mail: n_09@bk.ru
Call us: skype: dmit77757


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