A construction company filed a claim against its client to recover debt for work which has not been paid for. Later, it withdrew its claim and the case was terminated. Three months later, a bankruptcy case was initiated against the construction company.
Believing that the withdrawal of the claim served as a disguise for a withdrawal of assets, Pepeliaev Group filed an appeal stating that the withdrawal of the claim was an invalid transaction.
The appeal and cassation courts decided that the withdrawal of the claim did not violate third parties’ rights because it took place before the bankruptcy of the construction company. They also noted that the ruling to terminate the case was not subject to appeal.
Pepeliaev Group’s lawyers managed to prove in the Russian Supreme Court that the withdrawal of a claim may be challenged as a transaction by an extraordinary appeal of the court ruling to terminate the case and the claimant may provide in court new evidence that the withdrawal of the claim is invalid.
Roman Kozhevnikov, head of Pepeliaev Group's claims and litigation group, comments as follows: “This project is important because the Supreme Court has set a precedent which enables creditors to challenge as a transaction a bankrupt debtor’s withdrawal of a claim to disguise the withdrawal of assets. Creditors have received an additional instrument to increase the bankruptcy estate. On the other hand, parties to a dispute who wish to settle the dispute using the mechanism of the withdrawal of a claim need to take into account the bankruptcy risks”.
