Bankruptcy and Anti-Сrisis Protection of Business

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.

Draft law on the external management of companies associated with hostile states Pepeliaev Group advises that the Ministry of Economic Development, in accordance with the instructions of the Russian Government dated 8 March 2022, has prepared a draft law “On an external administration for the management of a company”.

The Russian Central Bank has introduced a procedure for maintaining a register of controlling persons for credit institutions, insurance companies and public pension funds Pepeliaev Group advises that on 26 July 2021 the Russian Central Bank’s Instruction No. 5814-U dated 9 June 2021 came into legal force regarding the form, procedure and deadlines for submitting information to the Bank of Russia about controlling persons of financial institutions, and the procedure for the Bank of Russia to maintain the list of such persons.

Criminal liability has been made harsher in the bankruptcy sphere Pepeliaev Group advises that a criminal liability has been made harsher for beneficial owners and other controlling persons, as well as court-appointed administrators for their unlawful activities during a bankruptcy and for deliberate bankruptcy.

The Russian Constitutional Court has allowed foreclosure on the only residential property of a bankrupt individual Pepeliaev Group advises that the Constitutional Court’s Resolution No. 15-P was published on 26 April 2021. The Resolution determines whether the only residential property should be excluded from the bankruptcy estate where such property belongs to an individual debtor and exceeds the property that is reasonably sufficient for satisfying the need for residential property established by the Constitution.

Counterparty’s insolvency risks for creditors of state and municipal unitary enterprises Pepeliaev Group advises of specific aspects of how claims of creditors of state enterprises are satisfied at the expense of the debtor’s rights to a land plot.

Strengthening risks of liability with respect to obligations of finacial institutions Pepeliaev Group advises that, from 1 July 2021 a significant amendment is expected in terms of the regulation of the status of persons controlling the activity of credit institutions and insurance companies and non-public pension funds, and their liability.

Moratorium for bankruptcies extended until 2021