Bankruptcy and Anti-Сrisis Protection of Business

The Russian Constitutional Court has changed its approach to the order of priority of legal costs under bankruptcy

Pepeliaev Group advises that the Russian Constitutional Court (the ‘Constitutional Court’) has adopted Resolution No. 11-P dated 19 March 2024. Articles 5(1), 5(2) and 137(3) of the Law on Bankruptcy have been checked for compliance with the Constitution as articles stipulating that, in practice, legal costs of the parties to standalone disputes be compensated after the principal debt of third-priority debtors is repaid.

The Russian Constitutional Court has excluded fines for tax offences from the scope of secondary liability The legal position of the Russian Constitutional Court on whether fines for tax offences of a debtor should be included in the amount of secondary liability of a controlling person.

The Overview of case law of the Russian Supreme Court with regard to the participation of a court appointed administrator in bankruptcy

The general approaches of courts to issues connected with court appointed administrators participating in bankruptcy cases are listed in the Overview of Case Law dated 11 October 2023.

The Russian Federal Tax Service has explained how taxes should be paid during bankruptcy

The main provisions of letter No. Kch-4-18/9242@ of the Russian Federal Tax Service dated 20 July 2023 regarding the order in which tax obligations should be performed when debtors’ assets are sold during receivership proceedings.

The Russian Constitutional Court has acknowledged the right of insurers to participate in disputes regarding court-appointed administrators to be held liable

The Russian Constitutional Court has adopted Resolution No. 30-P dated 5 June 2023. The Constitutional Court has checked whether article 35(2) of the Bankruptcy Law complies with the Constitution to the extent of how in legal practice the right was not recognised of an insurance company to participate in a dispute regarding the acts or omissions of a court-appointed administrator where no claim for losses to be recovered from the administrator has been asserted.

Clarifications of the Russian Supreme Court with respect to provisional remedies

The Plenum of the Russian Supreme Court has adopted Resolution No. 15 dated 1 June 2023 dedicated to provisional remedies. At the same time, resolution No. 55 of the Plenum of the Supreme Commercial Court dated 12 October 2006 “On how commercial courts apply provisional remedies” has been repealed.

The register of secondary respondents set up by the Federal Tax Service The Russian Federal Tax Service has launched a new service for searching for information regarding controlling persons who have been held liable under civil law. 

Temporary management of property of foreign persons

25 April 2023 the Russian President signed the Decree “On the temporary management of certain property”.

Draft law on the extraordinary fulfillment of obligations aimed at preventing disasters A draft law ‘On amending articles 126 and 134 of Federal Law “On insolvency (bankruptcy)”’ has been put before the State Duma. The draft law was triggered by Resolution No. 4-P of the Russian Constitutional Court dated 1 February 2022, adopted following a claim of PJSC T Plus which was drafted by Pepeliaev Group’s bankruptcy and anti-crisis protection of business Practice.

The risks are increasing for stakeholders that are investors

Pepeliaev Group advises that in August 2022 the Russian Supreme Court issued a Ruling confirming the court practice of the lower courts in the area of shared construction that investors who are individuals are deprived of the benefits in the event of the developers’ bankruptcy when residential premises are acquired for investment purposes.

The draft law on external administration of companies with foreign membership The draft law No. 104796-8 “On external administration for the management of a company” has been put before the State Duma.

Moratorium on bankruptcy

The purpose of the moratorium is to support citizens, individual entrepreneurs and companies which have found themselves in a difficult financial position after sanctions were imposed on Russia.