Expertise/Insolvency

Service

Creditor Protection in Insolvency

To participate in distributions, a creditor files a claim in the bankruptcy case, and the court decides whether to include it in the register. Once the claim has been filed, the creditor may object to other creditors' claims and to the insolvency practitioner's actions.

We are most often instructed by:

  • Creditors of a debtor in a bankruptcy case
  • Creditors whose claims are secured by a pledge of the debtor's property
  • Creditors intending to file a petition to declare the debtor bankrupt

The information on this website is provided for information purposes only and does not constitute a public offer.

What the Service Includes

Timing and Fees
–timing on request
from ₽fee on request

Timing and fees are indicative and are confirmed when the engagement is agreed.

01 / Overview
The creditor's position in the case

Some debts are not included in the register. Obligations that arose after the court accepted the petition to declare the debtor bankrupt are current payments: they are not included in the register of creditors' claims, and creditors in respect of them are not recognized as parties to the bankruptcy case. Current payments are distinguished from registered claims by the date on which the obligation arose.

Ranking determines what a creditor will receive. As a general rule, debts to bankruptcy creditors and authorized bodies rank third, while contractual penalties, fines, late-payment penalties and other financial sanctions are recorded separately in the register and are satisfied after the principal and the interest due have been paid.

02 / Categories
Categories of cases
  • Debt confirmed by a court rulingSupplies, works, loans and other obligations in respect of which the dispute has already been resolved.
  • Debt without a court rulingThe basis and amount are established during review in the bankruptcy case.
  • Security by pledgePledge agreements and other security transactions affecting the order of repayment.
  • Filing after the register has closedClaims of creditors who learned of the debtor's bankruptcy late.
  • Objections to other creditors' applicationsDoubts as to the validity of amounts claimed by other parties to the case, including those related to the debtor.
  • Disagreements with the insolvency practitionerReports, information and actions that give rise to objections.
03 / Outcome
Service Outcome
  • Written assessmentAn analysis of what the creditor is entitled to expect and what action is needed to obtain it.
  • Procedural documentsApplications, objections, motions and complaints prepared in the case.
  • Participation in hearings and meetingsPresenting the position when claims are reviewed and when voting on the agenda.
  • Support with distributionsDealing with ranking and the distribution of funds received.

The outcome of the service is the work performed within the scope agreed with the client.

04 / Preparation
What the position is built on

  1. Materials

    The position is built on the documents and the circumstances of the case; the following points are relevant.

    • Debt documentsContracts, primary documents, calculations and reconciliation statements.
    • Court rulingsJudgments delivered and information on the progress of their enforcement.
    • SecurityPledge agreements, suretyships and other security transactions.
    • Bankruptcy caseThe case number, its stage, the insolvency practitioner's details and notices received.
    • Relationship with the debtorAny equity participation in the debtor and other links, as well as the history of financing.
    • Purpose of the requestInclusion in the register, influencing the course of the case or recovering funds where the assets are insufficient.

  2. Assessment

    On the basis of the materials, the strengths and weaknesses of the position, the risks and the possible courses of action are identified.

  3. Plan

    For the chosen option, a plan is drawn up: the sequence of steps, timing and scope of work.

05 / Projects
Selected Projects
01 / 04

Subsidiary Liability

Reversal of a subsidiary liability finding in the Supreme Court of the Russian Federation

Challenge

The insolvency administrator and creditors sought to hold the chief executive of the bankrupt company personally liable for its debts. The lower courts granted the claims.

What was done

The case was taken to the Supreme Court, the good faith of each management decision was proven, and the Supreme Court set aside those court rulings. The amount of liability avoided is comparable to the total amount of creditors' claims in the register.

Acting for the creditor

Inclusion of an affiliated creditor's claims in the register: five related bankruptcies

Challenge

Five parallel bankruptcy cases were under way within a group of companies. The client was a creditor affiliated with the debtor, and the courts applied subordination: its claims were lowered in ranking.

What was done

A legal position was developed demonstrating that there were no grounds for subordination. The court rulings were set aside, and the claims were included in the register in full, on an equal footing with independent creditors, in all five cases.

Returning assets to the bankruptcy estate

Recovery of assets diverted on the eve of insolvency

Challenge

The debtor had diverted its assets through a chain of formally independent transactions, each of which appeared to be an ordinary commercial operation.

What was done

The full chain was reconstructed, and the interconnection and invalidity of each link were proven. The assets were returned to the bankruptcy estate in full, and the creditors obtained a real source of repayment.

Asset Protection

Protecting a client's assets in a third party's insolvency

Challenge

An attempt was made, by challenging transactions, to include the client's property – acquired, paid for and in commercial use – in the bankruptcy estate of an insolvent counterparty.

What was done

A legal position was built confirming the independent nature of the client's title. The court dismissed all the challenges, and the assets were preserved in full, without concessions or settlement agreements.

06 / Questions
Frequently Asked Questions

The claim is filed with the commercial (arbitrazh) court hearing the bankruptcy case, together with the documents on which it is based; copies are sent to the debtor and the insolvency practitioner. The court reviews the validity of the claim, and the claim is included in the register on the basis of a ruling.

The application and supporting documents are prepared, the composition and calculation of the debt are substantiated and, if objections are received, a position on them is set out.

The circumstances of the delay and the stage of the case are assessed. In certain cases the law allows such an application to be treated as filed on time, in particular if a court ruling needed to establish the debt did not previously exist.

An application after the register has closed still serves a purpose where the debtor has assets left after the registered claims have been paid or where claims are later brought against controlling persons.

A creditor that has filed a claim in the case is among the persons to whom the law grants that right. Objections concern the grounds on which the debt arose, its amount and the documents supporting it.

Applications by persons related to the debtor are assessed differently: their claims may be subordinated, in particular where the financing they provided is found to be compensatory.

Debt secured by a pledge of the debtor's property is repaid on a priority basis from the proceeds of sale of the pledged property, to the extent established by law, and the unpaid part moves to the third rank.

The work consists of substantiating secured creditor status when the application is reviewed and taking a position on the terms and procedure for selling the pledged property.

The grounds for claims against persons controlling the debtor and the circumstances of the transactions made by the debtor are assessed, as is the possibility of filing motions with the court to obtain information on assets.

The choice of action is discussed following the analysis: the law makes some of these actions dependent on the size of the claim included in the register.

An hourly rate, a fixed fee or a combined model is used; in some cases part of the fee depends on the outcome achieved. The fee is determined by the time actually spent, the complexity of the matter and the overall timeframe of the project, and is agreed before work begins.

Key Contacts
Anna Tarlakovskaya Anna Tarlakovskaya Partner Andrey Nemov Andrey Nemov Partner

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Other Services in This Practice
Subsidiary Liability Challenging the Debtor's Transactions Damages from Controlling Persons Debtor Insolvency Asset Protection Restructuring and Settlement Documents and Consultations

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