Changes in Russian Bankruptcy Law

The law provides for the phased introduction of new provisions, with some amendments entering into force one year after its official publication. At the time of publication of this news update, the law had not yet been published.

Key changes:

• Introduction of a debt restructuring procedure for legal entities
  The procedure is aimed at restoring the debtor’s solvency on the basis of a debt repayment plan approved by the court. The plan must be implemented within four years of its approval by the arbitration court, with the possibility of extension.

• New procedure for managing the debtor
  A court-approved restructuring plan may provide for the transfer of the powers of the sole executive body to a crisis manager. The court is entitled to dismiss the debtor’s director in the event of improper implementation of the plan or a breach of creditors’ rights.

• Control over transactions
  During the restructuring process, the consent of the creditors’ meeting or the crisis manager is required for major transactions (exceeding 5% of the book value of the debtor’s assets), as well as for transactions involving the granting of loans and guarantees.
  Transactions entered into in breach of the established procedure may be declared void, and losses may be recovered from the director as the controlling person.

• Liability for continuing loss-making business operations
  Where operations are knowingly continued despite being loss-making, the losses may be recovered jointly and severally from:
  – the members of the meeting who voted ‘in favour’
  – the bankruptcy administrator
  – and other persons deriving benefit therefrom. 

Link to the draft law: https://sozd.duma.gov.ru/bill/489384-8