Is it possible to challenge the set-off of claims in the debtor's contractual relationship?

The Supreme Court of the Russian Federation considered the case of challenging the agreements on set-off of claims that arose between the contractor and the customer.  The courts of three instances considered this to be a preference, but the economic board did not come to such a conclusion.

The initiator of the process was the bankruptcy trustee of the debtor company, which, in turn, performed contract work under the contract. As part of legal relations, just before the bankruptcy of the contractor, the parties signed a number of documents providing for the offset of counterclaims. In the course of work, the customer provided the contractor with materials, as well as other assistance, which was subsequently taken into account.

After the initiation of bankruptcy proceedings against the contractor, his bankruptcy trustee considered such behaviour of the parties to be a preference in relation to the customer while infringing on the rights of other creditors.

Indeed, at the time of signing the acts of offsetting claims and just before the bankruptcy, other creditors no longer received any settlements. The courts of three instances supported the trustee and invalidated the agreements signed between the parties.

The Supreme Court of the Russian Federation cancelled the decisions made and demanded a more detailed consideration of the issue. In the opinion of the Economic Board, offset agreements could not be considered preference transactions, since the decision on this type of settlement with the customer was made by the customer himself, but not by the debtor contractor. Thus, according to the Supreme Court of the Russian Federation, the settlement operation that took place could not be challenged under the rules of Article 61.3 of the Insolvency Law (decision No. 302-ES21-17975 of January 20, 2022 in case № A19-5340 / 2016).