Creditors’ Rights Improve With Amendments to Russian Bankruptcy Law
Significant improvements have been made to creditors’ rights in Russian bankruptcy proceedings by amendments made on January 29, 2015. The Federal Laws No. 432-FZ “On Amending Certain Legislative Acts of the Russian Federation” and No. 482-FZ “On Amending the Federal Law on Insolvency and Administrative Offences Code” (together, the Amending Laws) came into force in Russia. The Amending Laws significantly modify the Federal Law “On Insolvency” and, to a certain extent, improve creditors’ rights in Russian bankruptcy proceedings. Further changes come into force on July 1, 2015.
Specifically, the Amending Laws:
(a) increase the minimum amount of debt necessary to initiate bankruptcy proceedings from 100,000 rubles to 300,000 rubles;
(b) allow credit institutions to file a petition for bankruptcy without preliminary court’s ruling with respect to their debt. In this case, a credit institution must send a demand letter to the debtor (before July 1, 2015) or publish a statement of intention in the Unified State Register of Legal Entities within 15 days prior to the commencement of the bankruptcy proceedings (after July 1, 2015);
(c) establish an obligation for a company Chief Executive Officer to send notifications to the company’s shareholders about the risks of bankruptcy proceedings within 10 days after the Chief Executive Officer has learned (or should have learned) of such risks. A failure to abide by this obligation may lead to an administrative prosecution against the Chief Executive Officer and the penalty can be a fine in the amount of 25,000 to 50,000 rubles or the disqualification of the Chief Executive Officer.
Additionally, the Amending Laws change the requirements for a petition initiating bankruptcy proceedings. According to the new rules, the debtor who files a petition for voluntary bankruptcy does not have the right to appoint an insolvency manager. Consequently, the debtor loses the ability to retain control of the bankruptcy proceedings, which in the past has been detrimental to the creditors’ interests. This new provision will enter into force on July 1, 2015. In addition, a registered creditor whose claims constitute more than 10% of the overall amount of the registered creditors’ claims, now has the right to challenge certain debtor’s transactions.
It is important to note that the Amending Laws grant the insolvency managers the right to request information classified as commercial information, as banking information or relating to official secrecy, including information about the management of the debtor and any controlling persons, as well as about property belonging to them