BANKRUPTCY DISCHARGE IS NOT ACCESSIBLE TO EVERYONE SUMMED UP THE SUPREME COURT OF RUSSIA

As part of the insolvency case of an individual, the bankruptcy trustee filed a petition to complete the procedure for the sale of property, while there were not enough funds to settle with creditors. The creditor who participated in the consideration of the application expressed disagreement with the cancellation of the debt, citing the bad faith of the bankrupt.

However, the courts did not see any grounds for a rejection and satisfied the trustee’s claim. The creditor complained to the Supreme Court of Russia, which supported him.

The highest court recalled that the bankruptcy legislation established the good faith standard, which allows only an honest debtor to be released from debts.

When determining the criteria for his good faith, one should take into account the unintentional fall into a difficult financial situation, openness to cooperation with the trustee, the court and creditors.

When considering an insolvency case of a citizen, the latter is obliged to provide complete and comprehensive information about his property, sources of income and bank accounts. The opposite behavior is unacceptable for the privilege of debt cancellation and must be suppressed by the courts.

In the case under consideration, the debtor deliberately removed the property from the bankruptcy estate, which led to claims challenging the transactions.

Despite this, even after the agreements were declared invalid and the funds were returned, the debtor did not send them to the bankruptcy estate, but hid them from the trustee and the court.

Under such circumstances, it is incorrect to speak about the right of a bankrupt citizen to be exempt from debts, concluded the Supreme Court of Russia (definition No. 306-ES20-20820 of April 19, 2021).