Referred to the Supreme Court Chamber for Commercial Disputes: a dispute to challenge transactions in bankruptcy.

Elena Gladysheva, Managing Partner of RI-Consulting, Moscow, discusses what position the Chamber for Commercial Disputes can take. How can it influence the practice?

"The institution of contesting transactions in bankruptcy proceedings is one of the most widespread and effective ways to replenish a debtor's bankruptcy estate. At the same time, the courts that consider the relevant separate disputes often deviate from the provisions of law and, ignoring the existing law enforcement practice, come to conclusions that are absolutely contradictory in their content.

In this case, the 9th Arbitration Court of Appeal, which reversed the decision of the trial court and upheld the bankruptcy trustee's claim to invalidate the transactions involving the debtor's transfer of money in favor of a third party, proceeded from the fact that the supply and assignment agreements under which the disputed payments had been made were sham transactions (p.1, Article 170 of the Civil Code), since the parties had not originally sought to achieve the declared results.
It is important to note that in qualifying a transaction as sham, courts must take into account that the parties may carry out its formal execution (for example, concluding a sale agreement, drawing up an act on the transfer of property to the buyer). In this case, the final judicial acts must contain the arguments on the basis of which the court came to the relevant conclusion (about the formal execution of the transaction).
However, in this ruling the RF Supreme Court rightly noted that the Respondent in support of the validity of the disputed transactions to the court of first instance had submitted the necessary documentation, which had not been given proper assessment. In addition, the circumstances of sham contracts of supply and assignment in principle were not the subject of consideration by the court of first instance, which indicates that the 9th Arbitration Court of Appeal went beyond the claims.
In our opinion, the arguments set forth by the Respondent in the cassation appeal deserve attention, in which regard, the Supreme Court of the Russian Federation, having considered the complaint, will repeal the appealed judicial acts and send the separate dispute for a new hearing in a lower court," commented the advocate.

MORE ABOUT THE BACKGROUND OF THE CASE AND ADVOCATE'S OPINION

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.