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Russian Insolvency Law: the mechanism for creditors protection or the
Russian Insolvency Law: the mechanism for creditors protection or the
Insolvency law should provide protection of interests of
Insolvency law should provide protection of interests of
Mechanisms for creditors protection under Russian legal framework
Mechanisms for creditors protection under Russian legal framework
What transactions can be voided
What transactions can be voided
What transactions can be voided
What transactions can be voided
But in Russia creditors get only 6-8% of their claims in the end of
But in Russia creditors get only 6-8% of their claims in the end of
1. Distressed assets are sold at low prices
1. Distressed assets are sold at low prices
Liquidity crisis made Russian companies sell assets almost for free:
Liquidity crisis made Russian companies sell assets almost for free:
2. The same debtors asset can be pledged for many times
2. The same debtors asset can be pledged for many times
3. Barriers for fair auction
3. Barriers for fair auction
4. Other reasons
4. Other reasons
Asset stripping as a specific problem can be
Asset stripping as a specific problem can be
Bankruptcy of assetless debtors is for creditors who
Bankruptcy of assetless debtors is for creditors who
Sometimes the debtor should defend from creditors
Sometimes the debtor should defend from creditors
Conclusions
Conclusions
Thank you
Thank you

: Russian Insolvency Law: the mechanism for creditors protection or the opportunity to raid the company. : Paul Newson. : Russian Insolvency Law: the mechanism for creditors protection or the opportunity to raid the company.ppsx. zip-: 538 .

Russian Insolvency Law: the mechanism for creditors protection or the opportunity to raid the company

Russian Insolvency Law: the mechanism for creditors protection or the opportunity to raid the company.ppsx
1 Russian Insolvency Law: the mechanism for creditors protection or the

Russian Insolvency Law: the mechanism for creditors protection or the

opportunity to raid the company?

Olga Lvova The Lomonosov Moscow State University School of Public Administration

2 Insolvency law should provide protection of interests of

Insolvency law should provide protection of interests of

creditors from unfair debtors actions one creditors from unfair actions of other creditors the debtor from creditors unfair actions

3 Mechanisms for creditors protection under Russian legal framework

Mechanisms for creditors protection under Russian legal framework

Transactions voidance Subsidiary liability of the debtors director and control persons of the debtor when the assets are not enough Early filing for debtors bankruptcy to have an opportunity to choose Insolvency Administrator

4 What transactions can be voided

What transactions can be voided

1. Suspicious transactions:

With unequal counter-performance

Made for causing harm to creditors interests

1 year before bankruptcy 3 years

1 year before bankruptcy 3 years

contract price was < or > than market level in reality debtor had no assets and the deal was impossible

presumption: interested party knew that the debtor whether wanted to cause harm to creditors rights OR had insolvency features

only by Insolvency Administrator

5 What transactions can be voided

What transactions can be voided

2. Transactions giving preference to one creditor prior to other creditors if creditor wants to get additional security of existing debt in advance to debtors bankruptcy such creditor should take into account the opportunity of its voidance if transaction has been invalidated the assets is included in bankrupts estate to be distributed among all creditors if creditor has participated in such deal some kind of penalty

6 But in Russia creditors get only 6-8% of their claims in the end of

But in Russia creditors get only 6-8% of their claims in the end of

bankruptcy procedure. Why?

7 1. Distressed assets are sold at low prices

1. Distressed assets are sold at low prices

Short terms for purchasing and legal due diligence of such assets Risky for buyers who are sustainable companies majorly financed from equity

8 Liquidity crisis made Russian companies sell assets almost for free:

Liquidity crisis made Russian companies sell assets almost for free:

9 2. The same debtors asset can be pledged for many times

2. The same debtors asset can be pledged for many times

many opposite creditors secured by the same estate claims of the next collateral holder will be satisfied from the proceeds of pledged property sale only after satisfaction of former collateral holder claims

10 3. Barriers for fair auction

3. Barriers for fair auction

Manipulations with prices and nominee participants ? Who win from this? - Creditors, but absolutely definite creditors

11 4. Other reasons

4. Other reasons

Absence of the united criteria for conversion of claims expressed in foreign currency into national one Debtor can substantially slow down the proceeding by producing various opposing demands Before filing for debtors bankruptcy the creditor should apply to enforcement proceeding

12 Asset stripping as a specific problem can be

Asset stripping as a specific problem can be

realized by the debtor through contributions to the equity capital of other legal entities made even by banks as unfair creditors who sponsored their managements and other projects and progressively transferred from being creditor to being debtor a part of fictitious or deliberate bankruptcy

13 Bankruptcy of assetless debtors is for creditors who

Bankruptcy of assetless debtors is for creditors who

know that it is a way to acknowledge large debt as a part of tax expenses (to write debt off legally) are affiliated with debtor and pursue other goals but getting money back just dont think about this feature of debtor (e.g. Gazprom filed for bankruptcy of about 1500 debtors during one week)

14 Sometimes the debtor should defend from creditors

Sometimes the debtor should defend from creditors

Creditor acquires a significant part of debt becoming the main creditor. Than under the threat of bankruptcy or during bankruptcy proceedings he grabs most expensive firms asset (real estate, land, etc.) Criminal code does not contain special offence corporate raiding which is anyway hard to be proved

15 Conclusions

Conclusions

Current Russian Insolvency law is more oriented to creditors rights protection than before: modern basis for transaction avoidance and other ways to influence the process increase chances to charge debt. Bankruptcy can still be both a mean of hostile takeover of debtors assets and waste of time by creditors trying to get money back.

16 Thank you

Thank you

Olga Lvova Lvova.oa@gmail.com Lomonosov Moscow State University School of Public Administration RUSSIA

Russian Insolvency Law: the mechanism for creditors protection or the opportunity to raid the company
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