Bankruptcy in Russia: FAQ

Insolvency of both companies and individuals in Russia is governed by the Federal Law "On Insolvency (Bankruptcy)", and cases are heard by arbitrazh courts. For a foreign creditor, the key tasks are to get the claim into the register on time and to watch for asset transfers that can be reversed. Attorney Elena Petrova answers the questions she receives from creditors, directors and individual debtors.

Stages of Corporate Insolvency

What procedures can a company go through?

Supervision, financial rehabilitation, external management and liquidation proceedings (konkursnoe proizvodstvo). Settlement with creditors is possible at any stage.

Who can file the petition?

The debtor itself, a creditor, the tax authority or an employee with wage claims. A creditor usually needs a court judgment or a notarised debt before filing, with exceptions for banks.

Protecting a Creditor's Position

How do I get into the register of claims?

By filing a claim with the court within the deadline set for the stage, counted from publication of the notice in the Unified Federal Register of Bankruptcy Information (fedresurs.ru).

What if the deadline is missed?

The claim is still admitted but ranks after timely claims. In practice, late creditors often receive little or nothing.

Are secured creditors treated differently?

Yes. A pledgee receives most of the proceeds from sale of the pledged asset before the general third-priority creditors.

Challenging Pre-Bankruptcy Deals

Which transactions can be set aside?

Deals made at an undervalue, gifts to related parties and preferential payments to one creditor within the suspect periods before bankruptcy.

Who files such challenges?

The insolvency administrator, and in certain cases a creditor holding a significant share of the claims.

Subsidiary Liability of Directors and Owners

Can the director be personally liable?

Yes. Directors, shareholders and other controlling persons may be held liable for the company's debts if their actions caused insolvency or if they failed to file for bankruptcy on time.

Does liability survive the end of the case?

The claim can be brought after the case is closed, within the limitation period, and the obligation is not released by the controller's own bankruptcy.

Personal Bankruptcy

When can an individual file?

An individual must file if debts exceed a threshold set by law and cannot be paid. Below that threshold, filing is a right, not a duty.

Is there an out-of-court procedure?

Yes. A simplified procedure through a multifunctional centre (MFC) is available to people within certain debt limits and with no assets to sell.

What does the debtor lose?

Property beyond the protected minimum, including a second home, is sold. The only home is usually protected unless it is luxurious or mortgaged.

Consequences and Restrictions

Are all debts written off?

No. Alimony, damages for harm to health and debts arising from fraud survive. The court may refuse release if the debtor acted in bad faith.

What restrictions follow?

For several years the person must disclose the bankruptcy when borrowing, and cannot manage companies for a set period.

Acting for Foreign Creditors

How does the attorney work on insolvency cases?

We monitor fedresurs.ru and kad.arbitr.ru, file claims, attend creditors' meetings and challenge suspicious deals. Instructions are accepted under a notarised and apostilled power of attorney.

The main channel of communication with the attorney is email: attorneypetrova1@gmail.com.