The Supreme Court of the Russian Federation (SC) will decide which payments of a bankrupt citizen may be recognized as alimony for the maintenance of a minor child if no formal agreement on them has been concluded. Lower courts decided that in the absence of a written agreement, the money is not considered alimony payments, but the bankrupt's ex-wife succeeded in having the case referred to the Supreme Court Chamber for Commercial Disputes.

 ELENA GLADYSHEVA, ADVOCATE, MANAGING PARTNER OF RI-CONSULTING

The insolvency administrator of Game Insight LLC, Denis Kachura, discovered signs of premeditated bankruptcy of the company. The corresponding information was found in the Unified Federal Register of Bankruptcy Information (UFRSB) on February 7. Denis Kachura himself explained to Kommersant that he had already sent an appeal to the prosecutor's office where he outlined the signs of premeditated bankruptcy he had discovered and also stated that he planned to bring to subsidiary responsibility "a wide range of persons who control the company".
As Denis Kachura explained to Kommersant, Game Insight LLC is a subsidiary of the Lithuanian Game Insight Group UAB, which was also the main counterparty of the Russian legal entity. "The Russian Game Insight developed games on behalf of the Lithuanian company and received funds from it for this. Lithuanian Game Insight Group UAB owned the trademarks and intellectual rights to the games, while the Russian company was only engaged in custom development and did not have any rights to the games," he says.
Both the Lithuanian and Russian companies were controlled through different structures by three beneficiaries: Igor Matsanyuk, Grigory Finger, and Mikhail Vintschel, Mr. Kachura claims, citing Game Insight's internal documentation. "As of today, Game Insight Group UAB still owes Game Insight €1.4 million. The Lithuanian company is not transferring funds, referring to sanctions, but now it looks like a pretext," the insolvency administrator summarizes.

The Advocate answers Kommersant's questions:

- COULD THERE BE EVIDENCE OF PREMEDITATED BANKRUPTCY HERE?

It is difficult to say whether there are indications of deliberate bankruptcy in this case without having any evidence that the insolvency administrator had at his disposal when preparing the relevant analysis. However, given that a conclusion that there are indications of intentional bankruptcy is much less common in practice than a conclusion that there are no such indications, it is likely that the insolvency administrator of Game Insight LLC came to such a conclusion reasonably.

- IF THE PROSECUTOR'S OFFICE AGREES WITH THE FINDINGS OF THE INSOLVENCY ADMINISTRATOR, WILL A CRIMINAL CASE BE INITIATED?

If by results of check the prosecutor's office will reveal the facts of commitment of the actions (inaction) knowingly entailing inability of the legal body to satisfy in full requirements of creditors on money obligations, the prosecutor's office will initiate a criminal case under Article 196 of the RF Criminal code in the presence of corresponding qualifying signs.

- IN YOUR EXPERIENCE, WHAT IS THE OUTCOME OF SUCH CASES? IF THE COURT AGREES WITH THE FINDINGS OF THE INSOLVENCY ADMINISTRATOR IN TERMS OF VICARIOUS LIABILITY, WHO CAN FALL UNDER IT? WHAT ARE THE PROSPECTS FOR THE RECOVERY OF FUNDS FROM SHAREHOLDERS IN SUCH A CASE?

If the court agrees with the insolvency administrator's conclusions that there are grounds for bringing the debtor's controlling persons to subsidiary liability, any persons in respect of whom sufficient evidence is presented may be brought to justice: the sole executive body, chief accountant and/or chief financial officer, participants, beneficiaries, and any other persons not legally connected with the debtor, such as beneficiaries (who received the debtor's assets), including ordinary employees, relatives and friends of people whom unreasonably received funds or other assets of Game Insight LLC.
Practitioners generally distinguish between two types of prospects for recovery of funds from shareholders/beneficiaries/other controlling persons of the debtor: legal and actual. The legal possibility of recovery lies in obtaining an appropriate judicial act, which has entered into legal force, and is not difficult if there is evidence. The actual recovery is the most complicated category, because in practice, it takes more than one year from the moment of withdrawal of funds to the moment of obtaining the right for their enforced recovery from the debtor's controlling persons. Therefore, defendants may no longer have funds and assets. However, the current practice proceeds from the fact that even death does not release from debts under subsidiary liability and it does not release creditors from the hope to get money someday.

LINK TO THE CASE

Fedresurs media has prepared statistics on bankruptcies in 2022. Specifically, it points to a 12.2% decrease in corporate bankruptcies and a 39% decrease in observational bankruptcies, with no surge after the moratorium on bankruptcies was lifted in the fall.

The rise in consumer bankruptcies also slowed, from 62% to 44.2%. Out-of-court bankruptcies are on the rise (52,6%).

Elena Gladysheva, Managing Partner of RI-Consulting, describes the bankruptcy results in 2022, according to the data provided by Fedresurs. The expert gives her evaluation of the effect of the bankruptcy moratorium, the consequences of sanctions and other negative factors of the last year.

"This statistics, in my opinion, should be viewed a little more retrospectively, rather than affecting only the period of 2022.

Taking into account the recent years, the 'point of no return', which entailed an increase in the number of bankruptcy procedures, was still 2020 - COVID-2019 and the period of self-isolation, as well as the inability to fulfill a significant amount of obligations caused by downtime and lack of funds led to bankruptcy of a significant number of companies which have not prepared sufficient reserves.
The expected outcome of the bankruptcy moratorium in 2020 was an increase in the number of procedures in 2021.

In 2021, during the period of restoration of stability, there was no significant increase of new companies replacing the bankrupt companies, i.e., "the strongest survived".

In 2022, taking into account the current realities, the bulk of those who have already passed the period of 2020 continue to work, the economy and financial plans of companies have relatively adapted to the changes taking place, and have become much more liable, taking into account the experience gained.
For the most part, bankruptcy now will be taken over by those companies whose activities are directly or indirectly related to the foreign sector - obviously, the reason for this is the sanctions imposed.

In addition, no sharp upsurge of bankruptcies of individuals is also due to the procedure of out-of-court bankruptcy of citizens, introduced by the legislator earlier, the popularity of which, on the contrary, is growing every month, which is also confirmed by the above statistics," - notes the advocate.