Supreme Court of Russia explained how to deal with leasing in case of bankruptcy

Not so long ago, the Supreme Court of the Russian Federation published a new Review of Judicial Practice concerning various areas of law, including insolvency cases.  Specifically in this document, the highest court paid attention to leasing agreements and the specifics of working with them in the event of bankruptcy of one of the parties.  A number of important theses of the Supreme Court of Russia are collected in this material.

If a bankruptcy procedure has been introduced against the lessee, the lessor has the right to submit an independent claim to terminate the contract and receive the leased asset outside the bankruptcy case (clause 33 of the Review).

When considering the issue, the courts of all instances came to the unanimous opinion that the litigation within the framework of the contract concluded between the parties is by its legal nature similar to other claims regarding property, where the owner demands its return. In particular, we are talking about the recognition of ownership or contesting transactions. That is why the lessor, who is the owner of the leased asset until the moment of its complete redemption, has the right to file a separate claim agains the bankrupt lessee.

The fact of payment of lease payments by the lessee in a situation of his (her) own bankruptcy for the purpose of buying out the leased asset and thus replenishing the bankruptcy estate cannot be recognized as a preference over other creditors (paragraph 34 of the Review).

The bankruptcy trustee decided to challenge the lease payments made by the debtor shortly before and during the lessee's bankruptcy. The lower courts partially satisfied the claims, however, the Supreme Court of Russia pointed out the erroneousness of this position. The Economic Board indicated that the very fact of making lease payments cannot serve as a justification for the preference of the lessor's interests over other creditors, since the latter has the right to take the leased asset away in a situation of suspension of payments. And in the case of a complete redemption of the subject of the contract, the ownership of it will pass to the debtor, which will replenish the bankruptcy estate.

The lessor has the right to declare a demand for the return of the leased asset to him, despite the inclusion of the lessee's debt to him in the register of creditors’ claims.

The lessor, within the framework of the lessee's insolvency case, filed an application for inclusion of the debt under the leasing agreement in the the register of creditors’ claims. Subsequently, he initiated a case on termination of the agreement on the return of the subject of the agreement. The opinions of the courts were divided, but Supreme Court of Russia put an end to the matter. The Economic Board indicated that the lessor, whose claims were included in the register of creditors claims of the lessee, is not deprived of the right to file a claim to terminate the contract, however, if the court satisfies such a claim, the register of creditors' claims should be adjusted.