New Developments in the Bankruptcy Legislation

29.07.2009

Legal Update No. 55

Goltsblat BLP advises that Federal Law No. 195-FZ of 19 July 2009 “On Amendments to Certain Legislative Acts of the Russian Federation came into effect on 22 July 2009.

The law has introduced more changes into the Federal Law “On Insolvency (Bankruptcy)” and certain related provisions of some other legal acts of the Russian Federation.

All the amendments may be conveniently divided into two groups:

  • changes modifying the procedure for satisfying creditor claims secured by pledge;
  • changes relating to the status of insolvency officers (court-appointed administrators) and the procedure for remunerating them for their work.

The first group includes two types of change – those enhancing the opportunities for satisfying claims secured by pledge and those clarifying the procedure for selling the pledged property, in particular by eliminating delays caused by the need to obtain approvals from the creditors’ meeting and engage a specialised organisation.

If, for instance, a repeat auction is invalidated, secured creditors are now allowed to retain pledged property with an estimated aggregate value of ten per cent below the initial selling price announced at the repeat auction. The creditor should, however, remit a certain part of the retained pledged property’s value to the special-purpose bank account of the debtor for the purposes of settling with first and second priority creditors, paying legal fees and remunerating the insolvency officer and persons it engages.

The purpose of the second set of changes is clearly to tighten control over appointment of and fee payment to insolvency officers by creditors. Thus, fees payable to an insolvency officer are now set out by law and may be increased by the creditors instead of being fixed by the court, while an insolvency officer (not only a self-regulated organisation) should be nominated by the creditor (creditors’ meeting).

The amendments have made the wordings relating to payment of interest on fees due to insolvency officers clearer and have also fixed the sum insured under the mandatory liability insurance contract of an insolvency officer at 3 million roubles per annum.

These amendments to the insolvency (bankruptcy) legislation generally offer creditors a wider choice of methods for influencing the bankruptcy procedures and additional opportunities for satisfying their claims.

For additional information, please contact:

Elena Trusova, Head of Group,
Dispute Resolution,
Goltsblat BLP;
T: +7 495 287 44 44
E: info@gblplaw.com

Contact details

For all issues related to publications, news and press releases, please contact:

Ksenia Soboleva

Head of PR and Communications

Subscription

If you would like to receive our legal alerts and updates highlighting current legal issues relevant to your areas of interest and providing expert commentary by our lawyers, please click on "Sign Up" and fill out the form.