Bankruptcy Law in Russia: An Overview

Insolvency in Russia is governed by Federal Law 127-FZ "On Insolvency (Bankruptcy)". Cases for both companies and individuals are heard by state commercial courts. A company is usually declared bankrupt through several stages ending with the sale of its assets. An individual can go through debt restructuring or a sale of property, followed by release from most remaining debts.

Attorney Elena Petrova advises foreign creditors, shareholders and individuals with debts in Russia. The guide explains the main procedures and what each side can do.

Insolvency of Companies

A creditor can file against a company when overdue claims reach the threshold set by law and remain unpaid for three months. Before filing, the creditor must publish a notice of intent on the Fedresurs register. The company's director must file himself when the company cannot pay its debts. Delay creates personal liability for debts incurred afterwards.

Once the court accepts the case, it usually introduces supervision. An interim manager studies the finances and calls the first creditors' meeting, which decides what happens next.

Stages of a Corporate Case

In practice most cases move from supervision straight to bankruptcy proceedings.

Bankruptcy of Individuals

An individual must file when debts exceed a set amount and are more than three months overdue, and may file voluntarily earlier. The court appoints a financial manager. If the person has a stable income, the court may approve a restructuring plan. Otherwise it moves to sale of property.

A sole home is generally protected from sale, unless it is mortgaged. Debts such as alimony and damages for harm to health survive bankruptcy. Release can be refused if the debtor hid assets or acted in bad faith. A simplified out-of-court procedure through state service centres exists for small debts where enforcement has produced nothing.

Rights of Creditors

Creditors must file claims within deadlines counted from the official publication, which is made on Fedresurs and in the Kommersant newspaper. Claims filed late are paid only after the timely ones. Secured creditors are paid from the sale of pledged assets on priority terms.

Creditors vote at meetings in proportion to their claims. They may challenge transactions the debtor made before bankruptcy, such as sales below value or payments that favoured one creditor. They may also seek to hold controlling persons liable for the company's debts.

Controlling Persons and Subsidiary Liability

Directors, shareholders and others who controlled the company may be ordered to pay its debts from their own assets. Grounds include causing bankruptcy through harmful deals, failing to file on time and missing accounting records. This liability has become one of the main recovery tools for creditors.

Foreign shareholders are not immune, and court orders can be enforced against their assets in Russia.

Choosing a Strategy

A creditor should decide early whether to start bankruptcy, join an existing case or negotiate outside court. A debtor or director should assess personal exposure before any filing. Keeping full records and avoiding suspicious transfers protects both.

Working With the Attorney

We assess the debtor's position, file or defend claims, represent you at creditors' meetings and challenge transactions. Case files are tracked on kad.arbitr.ru, and you receive written updates in English.

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