In December 2014 Russia’s Federal Law “On Insolvency (Bankruptcy)” was significantly amended to introduce bankruptcy of individuals and modify the rules for bankruptcy of legal entities. The amendments related to bankruptcy of legal entities came into effect on 29 January 2015.
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General context
The statutory regulation of cryptocurrency in Russia is yet to be made compatible with the current dynamics of digital assets.
Russia’s bankruptcy law (the Law) has been amended to expand the list of persons who may be held vicariously liable for a bankrupt’s debts and clarify the grounds for such liability.
Definition of controlling person clarified
Russia's bankruptcy law (the Law) has been amended to expand the list of persons who may be held vicariously liable for a bankrupt's debts and clarify the grounds for such liability.1
Definition of controlling person clarified
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The Russian government has introduced a bankruptcy moratorium with effect from 1 April to 1 October 2022 in respect of all Russian legal entities and individuals (“Persons“) except for certain residential real estate developers.
The moratorium is intended to protect Russian debtors against creditors’ claims and provide support for players on the Russian market given the challenging environment they operate in.
The key consequences of the introduction of the moratorium regime are as follows:
1. Introduction
As in other jurisdictions, Russia’s insolvency legislation is based on the pari passu principle. However, this principle is subject to certain exceptions, specifically with respect to shareholders and other non-arm’s length creditors, such as the controlling persons of an insolvent company (“Affiliated Creditors”).
In practice, Affiliated Creditors use other instruments (e.g. loans, intergroup supplies etc.) to have their claims listed in the creditors’ register of an insolvent company.
The ongoing COVID-19 pandemic has profoundly reshaped the global business landscape. Some companies that only months ago seemed unstoppably profitable have been brought to an existential brink by extended lockdowns, supply chain failures, and other obstacles caused by the pandemic. Other companies who have experienced less disruption (or in some cases windfalls) stand at the threshold of opportunity even as they prepare themselves for the challenges of the 'new normal'.