Insolvency Law of Russia in Detail

In Russia, insolvency law is governed by the Federal Law on Insolvency (No. 40-FZ) of 2002. This law defines insolvency as the inability of a debtor to fulfill their obligations in a timely manner.

The insolvency law in Russia recognizes two types of insolvency: corporate and individual. Corporate insolvency applies to enterprises, while individual insolvency applies to natural persons.

The law requires that a debtor be declared insolvent by a court decision. This decision is typically based on a petition filed by the creditor or the debtor themselves.

The Russian insolvency law provides for several types of insolvency proceedings, including voluntary and involuntary bankruptcy, as well as reorganization and liquidation.

The Russian Insolvency Law provides a framework for dealing with insolvent companies in Russia.

In 2011, a modification to the law enabled the Unified Federal Register of Bankruptcy Information (UFRBI), an electronic platform containing information on all insolvent companies in Russia. This has led to Russia rising several positions in the OECD’s Report on Resolving Insolvency.

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The law provides for the assessment of creditors' claims. This is an important step in the insolvency process, as it ensures that all creditors are treated fairly and their claims are properly evaluated.

The law also allows for financial reorganization of companies. This can be a valuable option for companies that are experiencing financial difficulties, as it can help them to get back on their feet without having to go through the full insolvency process.

Here are the key features of the Russian Insolvency Law:

The law also contains special provisions related to the insolvency of financial institutions in Russia.

The Russian Insolvency Law outlines a clear process for handling insolvency cases, which starts with filing a petition with an arbitration court. This is a crucial step before any insolvency proceedings can begin.

The court's approval of the petition is necessary for bankruptcy to be declared and insolvency procedures to be initiated. Once the petition is approved, the insolvency process can move forward.

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According to the Insolvency Law, the stages of insolvency proceedings in Russia are supervision of the process, company reorganization, outside administration, liquidation, and amicable agreements. These stages provide a structured approach to resolving insolvency cases.

The Unified Federal Register of Bankruptcy Information (UFRBI) is an electronic platform that contains information on all insolvent companies in Russia, making it easier to track and manage insolvency cases. This has contributed to Russia's improved ranking in the OECD's Report on Resolving Insolvency.

Here are the stages of insolvency proceedings in Russia, as outlined by the Insolvency Law:

The Insolvency Law also provides for the assessment of creditors' claims, financial reorganization of companies, and supervision of corporate restructuring procedures.

During the term of the moratorium, Russian obligors are exempt from the obligation to file for their own insolvency, but they can still choose to do so if they wish. This exemption only applies to Russian obligors, not foreign entities.

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Courts will not accept new insolvency petitions against the affected persons, and any existing petitions will be returned if the court hasn't already accepted them. This means creditors can try again once the moratorium is lifted or renounced.

The moratorium also affects the process of compulsory debt restructuring, which is available to Russian obligors who have filed for bankruptcy. This restructuring is available for a period of one year, provided certain statutory conditions are met.

During the term of the moratorium, courts will not accept new insolvency petitions against the affected persons.

This means that if a business is already struggling financially, it won't be able to be taken to court for insolvency during the moratorium period.

Courts will return any insolvency petitions submitted before the introduction of the moratorium, provided they haven't yet been accepted. This doesn't prevent creditors from resubmitting the petition once the moratorium is lifted or renounced.

Russian obligors are exempt from filing for their own insolvency during the moratorium period, but they're not prohibited from doing so if they choose to.

If a Russian obligor has filed for bankruptcy during the moratorium, it's entitled to petition the court for compulsory debt restructuring for a period of one year, provided certain conditions are met.

All penalties and default interest for failure to perform contractual obligations cease to accrue.

This means that Russian obligors are temporarily shielded from incurring additional debt due to missed payments.

No dividends can be distributed.

This restriction applies to all Russian obligors, effectively freezing any potential payouts to shareholders.

Creditors are restricted from enforcing pledges and mortgages granted by Russian obligors.

This includes any collateral that was pledged or mortgaged as security for a loan.

The following restrictions are in place:

During the term of the moratorium, courts will not accept new insolvency petitions against affected persons.

If a creditor has already submitted an insolvency petition before the moratorium was introduced, the court will return it, unless the court has already accepted the petition. This doesn't prevent the creditor from submitting the petition again once the moratorium is lifted or renounced.

Russian obligors are exempt from filing for their own insolvency during the moratorium period, but they can still choose to do so if they want to.

The stages of insolvency procedures in Russia are outlined in the Russian Insolvency Law. These stages include supervision of the process, company reorganization, outside administration, liquidation, and amicable agreements.

Here's a summary of the stages:

If a Russian obligor has filed for bankruptcy during the moratorium, it can petition the court for compulsory debt restructuring for a period of one year. This is available if certain statutory conditions are met, including the creditors voting against a voluntary arrangement.

In Russia, a settlement agreement can be reached at any stage of the bankruptcy proceedings. This agreement involves the debtor, creditors, and the company under bankruptcy.

The debtor's executive director can enter into a settlement agreement during the monitoring and financial recovery period. In contrast, an external administrator can only do so during the phase of external control.

To approve a settlement agreement on behalf of the bankruptcy creditors and authorized bodies, a simple majority (50% + 1 vote) is required. This must be done at a meeting of creditors.

The Federal Law № 127-FZ "On Insolvency (Bankruptcy)" outlines the requirements for settlement agreements in Russia.

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When dealing with loan agreements, it's essential to consider the potential impact of a moratorium. Many loan agreements include provisions that may be breached by the introduction of the moratorium and result in a technical default.

In order to protect the rights of lenders, it's usually advisable to push the Russian obligor to renounce the application of the moratorium. This can help prevent unnecessary disputes and technical defaults.

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A settlement agreement can be reached at any stage of bankruptcy proceedings, and it's crucial to understand the roles involved in this process.

The debtor must be represented by the Executive Director during the monitoring and financial recovery phase, and by an External Administrator during the external control phase.

In the settlement process, the manager's role is eliminated.

To approve a settlement agreement on behalf of the creditors and authorized bodies, a simple majority vote (50% + 1) is required from the bankruptcy creditors and authorized bodies during a meeting.

Here's a breakdown of the roles involved in approving a settlement agreement:

In Russia, the insolvency process is led by an insolvency officer, also known as a trustee in bankruptcy. This person has a significant impact on the debtor's assets and operations.

The insolvency officer's role varies depending on the stage of the proceedings. During the monitoring phase, the interim officer is in charge. In the economic scenario of rehabilitation, the administrative officer takes over. The external manager handles external management, while the settlement officer is responsible for liquidation.

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The powers of the liquidator depend on the phase of the competition. For instance, the interim manager has no right to manage the debtor's affairs during the monitoring step, but gains this right at a later stage.

In the settlement process, current liabilities have priority and are satisfied before other claims are met. Here's a breakdown of the priorities:

The Russian Insolvency Law provides for a range of procedures to help companies and individuals in financial distress. This includes assessment of creditors' claims, financial reorganization of companies, and supervision of corporate restructuring procedures.

The law also allows for amicable arrangements between debtors and creditors, which can be a more efficient and cost-effective way to resolve insolvency issues. This can be beneficial for both parties involved.

The Insolvency Law in Russia contains six key provisions:

Russian Law Provisions provide for the assessment of creditors' claims and financial reorganization of companies. This is a crucial aspect of the law, as it allows for the restructuring of companies in a way that benefits all parties involved.

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The Insolvency Law in Russia also includes provisions for the supervision of corporate restructuring procedures. This ensures that the process is carried out in a fair and transparent manner.

In 2011, the Unified Federal Register of Bankruptcy Information (UFRBI) was enabled, making it easier to access information on insolvent companies in Russia. This has led to Russia rising several positions in the OECD’s Report on Resolving Insolvency.

Here are the key provisions of the Insolvency Law in Russia:

Russian insolvency law also contains special provisions for certain types of borrowers, including insurance companies, professional participants of the securities market, and agricultural organizations. These provisions are designed to address the specific needs of these types of borrowers.

The scope of application for the insolvency moratorium in Russia is quite broad, covering all Russian legal entities, individuals, and sole entrepreneurs.

However, there is an exception for real estate developers listed on the unified register of distressed objects, which are exempt from the moratorium.

Each Russian obligor has the right to renounce the application of the moratorium if they choose to do so.