Is bankruptcy trustee obligated to offer a deal to the third auction participant?

A case in which the parties disputed the actions of a bankruptcy trustee was submitted for consideration of the Arbitration Court of the Moscow District. Some of the participants believed that he should had offered the deal to the third auction participant, while others believed that he should had initiated another procedure.  The district court dealt with the legislative subtleties on this issue.

As a part of the bankruptcy case, the trustee organized an auction for the sale of the receivables of the insolvent company.  The event was attended by three individuals who offered their price per lot.  The citizen who won the auction did not pay the indicated amount, in connection with which the manager turned to the company, which was the second in terms of the offer price.  The company, in turn, refused to conclude a deal.

Then the trustee recognized the auction as invalid and announced a new one, in which only one individual took part.  A deal was signed with him.

This state of affairs did not satisfy the company, which acted as the third participant in the first auction.  The applicant considered that the in the current situation, the trustee should had sent a notification with a proposal to conclude a deal to him.  The court of first instance and the court of appeal upheld this position.

However, the district board recalled that the law provides for the obligation of a trustee to send a proposal to conclude a deal only to the second participant in a situation where the first one refused to do it for some reason.  At the same time, if the conclusion of an agreement with the second participant did not occur, the organizer declares the auction invalid and conducts new ones, which was done (decision on case No. A40-44480 / 2019 of February 8, 2022).