Decrease in the register of creditors' claims after cession, succession

Decrease in the register of creditors' claims after cession, succession. Arbitrage practice.

The subordination of creditors' claims, that is, their reduction in the register of creditors' claims to the order preceding the distribution of the liquidation quota, became possible for affiliated creditors in connection with the release of the Review of the Practice of the RF Armed Forces. The purpose of such a reduction is to ensure that unscrupulous creditors cannot bypass the queue in the register, thereby violating the rights of independent creditors. In addition, the persons controlling the debtor are trying to pass off corporate claims as non-corporate ones in order to increase the priority.

The review also describes the situation when the right of claim is assigned to an affiliated creditor. In the following case, the courts tried to figure out what to do if the assignment of the right to claim occurred after the filing of an application for declaring the debtor bankrupt, that is, as part of the bankruptcy procedure.

Case plot:

PJSC Rostelecom assigned the right to claim under the agreement to Kosovo by way of assignment. As part of the bankruptcy case, the claims of PJSC Rostelecom were included in the third line of the register of creditors' claims. After the cession, Kosov applied to the Arbitration Court with an application for the procedural replacement of PJSC Rostelecom with Kosovo.

The court of first instance satisfied Kosovo's application, and the court of appeal upheld its ruling. They came to the conclusion that the material succession is the basis for the procedural replacement of the creditor. But the district court changed the definition, lowering Kosovo in the register of creditors' claims (priority prior to the distribution of the liquidation quota), on the basis that the affiliated person acquired the right to claim against the debtor already in the bankruptcy proceedings, that is, in the state of insolvency of the debtor that was obvious to the applicant.

The Supreme Court did not agree with the findings of the district court, canceled its decision, upheld the decision of the court of first instance and the decision of the court of appeal.

Judicial act: Determination of the SCES of the Armed Forces of the Russian Federation of August 20, 2020 No. 305-ES20-8593 in case No. A40-113580 / 2017

Court's findings:

1. Bankruptcy legislation does not contain provisions according to which the affiliation of a person is an independent ground for refusing to be included in the register of creditors' claims or a ground for lowering the order of satisfaction of claims of affiliated creditors for non-corporate civil obligations.

2. Exceptions to the general rule are contained in the Subordination Review. In particular, if the creditor controlling the debtor has acquired a claim against the debtor from an independent creditor against the backdrop of the latter's property crisis, then the order of satisfaction of his claims is lowered.

3. If the acquisition of a claim against a debtor under an assignment agreement is made by an affiliate after the debtor is declared bankrupt, then there is no compensatory financing of the debtor, and as a result, the legal position in the Review of the Supreme Court of the Russian Federation does not apply to this case.

4. In itself, the presence in the register of creditors' claims of a person affiliated with the debtor does not entail negative consequences for independent creditors and is not illegal.

Comments:

1. The courts of lower instances formally approached the consideration of the application, therefore they came to the wrong conclusion about the need to lower the affiliated creditor in the register of creditors' claims, referring to the clarifications of the Supreme Court of the Russian Federation that were not applicable to this case. The Supreme Court rightly noted that an affiliated creditor, when it received the right to claim a debtor from an independent creditor, in fact allowed this creditor to receive satisfaction of its claims. Meanwhile, in the framework of a bankruptcy case, the debtor might not have enough property to satisfy these claims in full. It turns out that the cession was beneficial to the independent creditor.

2. The review of the Supreme Court of the Russian Federation describes a situation where the assignment of the right to claim to a person affiliated with the debtor is designed to hide the signs of bankruptcy and show the creditor an imaginary financial solvency. But if the debtor has already filed an application for bankruptcy, that is, he acknowledged his difficult financial situation, then the assignment of the right to claim will only support the property interest of creditors.

3. The assignment took place during the bankruptcy proceedings, when it was impossible to mislead other creditors due to the openness of the bankruptcy proceedings. Therefore, in this case, there is no reason to believe that the affiliated creditor attempted to cause harm to creditors and, therefore, should be lowered in the register of claims.

Please note that in 2020 the law firm Vetrov & Partners was marked by the industry rating of law firms Pravo.ru-300 in the nominations Arbitration Proceedings, Dispute Resolution in Courts of General Jurisdiction and is one of the regional companies throughout Russia in these nominations.

In the event that your litigation or other dispute, contractual work or any other form of activity concerns the issues discussed in this or our other material, we recommend that you check and make sure that your legal position complies with the latest changes in practice and legislation.

We will be happy to provide you with legal assistance regarding the minimization of legal risks and available opportunities. We will try to find a solution that is right for you.

Call +7 (383) 310-38-76 or write to info@vitvet.com.

Our law firm provides various legal services in different cities of Russia (including Novosibirsk, Tomsk, Omsk, Barnaul, Krasnoyarsk, Kemerovo, Novokuznetsk, Irkutsk, Chita, Vladivostok, Moscow, St. Petersburg, Yekaterinburg, Nizhny Novgorod, Kazan, Samara, Chelyabinsk, Rostov-on-Don, Ufa, Volgograd, Perm, Voronezh, Saratov, Krasnodar, Tolyatti, Sochi).

Marina Sorokina