Challenging transactions made by debtors in anticipation of insolvency: the Plenary Session of the Russian Supreme Commercial Court made the clarifications

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This issue reviews the most important recent changes to the regime of challenging transactions made by debtors in anticipation of insolvency. These changes were introduced in the Resolution adopted at the Plenary Session of the Supreme Commercial Court of the Russian Federation (the “Supreme Commercial Court”) No. 63 “Certain Matters Relating to the Application of Chapter III.1 of the Federal Law “On Insolvency (Bankruptcy)” dated 23 December 2010 (the “Resolution”).

Initially, the provisions of the Insolvency Law3 and the first version of the Resolution were aimed at preventing debtors from syphoning off assets in certain situations, e.g. when debtors anticipate their insolvency and prepare for it in advance by transferring assets to third parties, or when creditors that are aware of the debtor’s upcoming insolvency attempt to discharge obligations owed to them and circumvent other creditors’ claims. However, debtor’s transactions relating to discharging obligations owed to persons acting in good faith are being increasingly challenged on the grounds that they meet the criteria of suspicious transactions, transactions aimed at causing harm to creditors, or those resulting in one of the creditors being preferred to other creditors.

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Topics:  Consumer Bankruptcy, Debtors, Insolvency, Russia

Published In: Bankruptcy Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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