THE SUPREME COURT ALLOWED TO BANKRUPT FOREIGN FIRMS IN RUSSIA

On March 21, 2023, the highest court in the Russian Federation issued a verdict (Definition No. 309-ES23-1409) in the bankruptcy case of a foreign company (No. A76-31539/2021). The representative of the defendant tried to appeal the decision of the Chelyabinsk arbitration court adopted in April 2022 to declare bankrupt a company established in Saint Kit and Nevis (an island state in the Caribbean Sea).

The initiator of the bankruptcy of a foreign legal entity in 2021 was Vitaly Nakhabin. Rusbankrot wrote in detail about this case in May last year after the company was declared bankrupt.

The first instance, considering the case, considered sufficient evidence of the close connection of the legal entity with Russia to enter bankruptcy proceedings. Nakhabin's claim to Pandora consulting LC. in total, the court added more than 1.34 million to the register. An attempt to appeal the decision in appeal, and then in cassation, did not affect the course of the process.

Opinions on this issue are divided among lawyers. Considering that judicial practice has not yet developed a unified approach to bankruptcy claims, where the defendant is a foreign element, many experts spoke in favor of the cancellation of such a verdict by the Supreme Court.

Apparently, Igor Grechanik (the sole owner of the company and a Russian citizen), who filed a complaint with the Armed Forces of the Russian Federation, counted on this outcome of the case. However, his application was refused. Judge Samuilov, who reviewed his application, did not give any special explanations on the case. He found no significant violations of legal norms in the verdicts adopted earlier in the case.

It is worth noting that attempts to declare a foreign individual or company insolvent have been made before. In February 2017, Alexander Baranov wanted to bankrupt a company registered in Cyprus (case no. A40-15873/17). However, the court did not initiate proceedings on his application.

Another well-known lawsuit was that of Alice Dedyukhina, who tried to declare a company established in Norway insolvent (case no. A40-325345/19). The arbitration refused to accept the application from her. In the Decision of the appeal, adopted in December 2019, it was stated that the company (Clarksons Plateau As) has a representative office in the Russian Federation, however, by law it cannot be considered an independent legal entity. Liquidation of a legal entity, as it was indicated in court, must be carried out according to the legislation of the country of which the person is a resident.

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