Sergei Bakeshin has commented for the Novy Prospekt on the repeated auction for the sale of assets of the bankrupt company founded by the former Vice-Governor of the Leningrad Region

Sergei Bakeshin - Senior Associate

In 2018, the Arbitration Court of St Petersburg and the Leningrad Region declared JSC Domostroitelny Kombinat № 5 (JSC DSK-5) as bankrupt. The company was part of GlavStroyComplex, founded by former Vice-Governor of the Leningrad Region Nikolay Pasyada, who was responsible for the development of the construction complex in the region. The total debt of DSK-5 is about 1.5 billion rubles. The first auction to sell the bankrupt’s property was unsuccessful.  The second auction is scheduled for November 12, but experts estimate that the value of the assets is overestimated again.

The lawyers explain that it is possible to sell the bankrupt’s property for as long as you like: the maximum total period of bankruptcy proceedings is not limited in time, and a court extends the procedure until all the property is sold and the proceeds are distributed among creditors. The first bidding is an auction. If the auction is unsuccessful, the initial price of the property is reduced by 10% at the repeated auction. Subsequent bids are held in the form of a public offer, and the price is gradually reduced until the property is bought or until the price reaches the lower limit.

“The law does not directly provide for any subsequent tenders. But in practice, if a property has not been sold in the course of public offering, new tenders may be scheduled. It is also held in the form of a public offer, but with a lower price», commented on the situation for Novy Prospekt newspaper Sergei Bakeshin, Head of Dispute Resolution and Bankruptcy Practice at Maxima Legal.

At present, the property of the bankrupt company is partly leased out, which should not become an obstacle to the scheduled bidding.

“But courts usually find it illegal to enter into agreements to lease the debtor’s property for a period exceeding the term of bankruptcy proceedings,” added Sergei Bakeshin. He also did not rule out a possibility of creditors of DSK-5 to challenge the actions of the bankruptcy manager to enter into this lease agreement in court.

To read the article (in Russian) in full, please see the Novy Prospekt website >>>