Sergei Bakeshin has analysed the current situation in bankruptcy for RBC+

The moratorium on bankruptcy was lifted in Russia on 8 January 2021. Sergei Bakeshin, Head of Dispute Resolution and Insolvency Practice at Maxima Legal, has assessed the current situation in this area of law and analyzed changes and future developments in court practice and bankruptcy legislation on request of RBC+.  

Sergei told RBC+ that the number of bankruptcy proceedings that were initiated in St Petersburg in the first nine months of the year 2021 increased by 16.5% as compared with the same period of the previous year.

Analyzing bankruptcy court practice, the expert drew attention to the ruling of the Constitutional Court of the Russian Federation giving the possibility to foreclose on a debtor’s only housing in case it is deemed luxurious. “The enforcement of the only dwelling in personal bankruptcy may become as widespread as vicarious liability in corporate bankruptcies, taking into account that the number of personal bankruptcies increases exponentially year after year”, Sergei noted.

Furthermore, according to Sergei Bakeshin, the current bankruptcy legislation requires changes. “Much of the proposed changes to the bankruptcy law are dictated by practice. For example, external administration and especially financial rehabilitation have been used so rarely that anyone will be very sad about them. Three-stage tenders (two auctions and a public offer) should also have been abandoned long ago. They only prolong the procedure and the debtor’s property is usually sold in the last periods of price reduction in the public offer,” the expert explained.

Assessing the prospects for changes in bankruptcy legislation Sergei assumed that it will continue to develop in a pro-credit scenario. “The draft law introduced in the State Duma does not contain the institution that experts have long been talking about the need for – consolidated bankruptcy, which can be applied to groups of affiliated companies as well as to spouses,” said the expert.

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