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On 26 March 2020 a draft law was put before the State Duma; this draft law grants a right to the Russian Government to introduce a moratorium on the initiation of bankruptcy cases in extraordinary cases. Taking into account the current situation, we can expect that the draft law will be promptly adopted and applied.
The moratorium will cover only companies of certain categories, sectors and types of activities, the list of which will be determined by the Russian Government.
At the same time the moratorium covers only the initiation of bankruptcy by creditors and it suspends only the obligation of debtors to file a petition for their own bankruptcy (the duration of the corresponding timeframes for filing the petition).
The right of a debtor, even in a category established by the Russian Government, to apply with its own bankruptcy petition remains.
Recommendations:
Starting from the day when the moratorium is introduced all published notifications of a creditor concerning the intention to file for the bankruptcy of companies included in the established list lose their force, and the court returns bankruptcy petitions filed by creditors against debtors in the corresponding categories.
If a petition has been accepted for court proceedings before the date when the moratorium was initiated, but the first bankruptcy procedure has not yet been introduced, the court will suspend proceedings on this case for the period while the moratorium is in force.
From the date when the moratorium is introduced certain consequences occur which are stipulated for the initiation of the supervision procedure:
Recommendations:
In accordance with the text of the draft law, all transactions are recognised as void that involve the disposal of the debtor’s property performed within the period when the moratorium was in force, except for those performed within the framework of the debtor's ordinary business activity which do not exceed 1% of the amount of the debtor’s assets.
Recommendations:
Please be reminded that a transaction amount of less than 1% does not in itself mean that the transaction will be classified as ordinary. The transaction should also be ordinary from the standpoint of the circumstances in which is it carried out. For example this preference does not apply to deferred payments.
The period for suspicion when transactions are challenged and timeframes for recognising the party as an interested party shall be calculated from the date when the moratorium was introduced in case of filing a bankruptcy petition within three months from the date when moratorium expires.
The contents and volume of monetary obligations and the exchange rate of the rouble are determined on the date when the moratorium is introduced if the bankruptcy petition is filed within three months from the date when the moratorium expires.
While the moratorium is in force it is permitted to hold meetings of creditors, committees of creditors, participants in construction and employees of a debtor using absentee ballots.
In bankruptcy cases initiated by the debtor within the period when the moratorium is in force an amicable agreement can be approved by the court further to the debtor’s petition even if the amicable agreement has not been approved by the creditors’ meeting.
The terms and conditions of amicable agreements entered into further to a debtor’s petition during the moratorium and in bankruptcy cases initiated within three months after the moratorium, cover even creditors’ claims that are not included in the register of creditors’ claims.