Russian insolvency law provides that directors (and other controlling persons) can be held liable for the failure to file for insolvency in a timely manner and for actions (or inaction) that prevented full repayment of the creditors’ claims. The amendments to the insolvency law, introduced by the Federal Law No. 266-FZ on 29 July 2017 further systematise rules on directors’ liability, elaborate them and provide for effective tools to fight abusive and opportunistic managerial behavior.

The Dutch Minister’s announcement of a multi-disciplinary approach to combat bankruptcy fraud has lead to a legislative programme that went into force last year, wherein the duty of the trustee is extended to combat bankruptcy fraud.

After the collapse of the Soviet Union the banking sector in Russia was quickly developing and at the start of the twenty first century it consisted of more than 1,000 banks. Most of these banks had been established to serve the main business of the shareholders or for money laundering. Some, of course, did classical banking business, but frequent failures of such banks were harmful to the market. Finally, the Central Bank of the Russian Federation announced the new policy – strong financial requirements for the banks were introduced.

Russian courts, including the Supreme Court of the Russian Federation, reasoned that a foreign insolvency order did not prevent Russian courts from hearing the case under Russian insolvency law. Russian citizens do not initiate insolvency proceedings outside Russia regularly, and the case of Mr. Kekhman in this respect is exemplary, allowing us to see the larger picture related to the treatment of foreign insolvency proceedings in Russia.

Following the economic downturn in the aftermath of the 2008 financial crisis, the number of insolvency applications in Russia has been fluctuating, but remained relatively stable with approx. 40,000 insolvency applications per year.

The Law deals with pre- insolvency re-organisation and formal insolvency procedures including re-organisation. Starting from the 1998 crisis, the commercial courts have developed a great expertise in dealing with insolvency.

By: Roger Kennell & Olga Bischof Background In July 2014 we reported that an international arbitral tribunal sat in the Hague had ordered the Russian Federation to pay over US$ 50 billion to former shareholders of the Yukos oil company, for its politically motivated campaign to destroy Yukos’ business and expropriate its assets for the Russian state oil company, Rosneft.

Russia: On raising professional qualification requirements for insolvency practitioners. Russian insolvency legislation sets out certain requirements an insolvency practitioner has to satisfy before his appointment in an insolvency case can be approved by the court.

The EU has implemented a program of sanctions and restrictive measures designed to target Russia and persons responsible for actions that undermine or threaten the territorial integrity, sovereignty and independence of Ukraine. Whilst these measures had previously been limited to asset freezes against a number of named individuals and entities, Regulation 833/2014 of 31 July 2014 has broadened the scope of these measures to impact the wider Russian economy, including its energy industry and financial sector. Read more