THE SUPREME COURT CLARIFIED THE GROUNDS FOR THE INSOLVENCY ADMINISTRATOR’S SUBSTITUTION

The day before, the Supreme Court has assessed the legal possibility of substitution of an insolvency administrator in a debtor's bankruptcy procedure.

It should be noted that the choice of administrator is extremely important, since it is this person who "leads" the process, forming the bankruptcy estate, working with creditors and assessing the possibility of applying a specific procedure to the debtor.     

A real struggle may begin around the personality of the manager among the creditors and other interested parties, including the debtor himself.

However, first of all, it is worth noting that the appointment of an insolvency administrator is carried out by the court, which, in turn, has the right to do this both at the suggestion of the creditor and in a random way in order to achieve his maximum impartiality.   

At the same time, if the court has doubts that the appointed administrator will equally pursue the interests of both creditors and the debtor, it might be replace him or her by another person. This conclusion was made by the Supreme Court of the Russian Federation when considering a complaint against a ruling of a Court of Appeal in a specific case.      

In the current legal situation, the court had doubts that the first creditor, who announced the debt and proposed the candidacy of the administrator and the debtor, who was in the process of liquidation, did not have a common goal - the bankruptcy of the latter with the subsequent remission of all his debts. In this regard, the Supreme Court of the Russian Federation indicated the need to substitute the insolvency administrator through a random selection or appointment of a candidate, proposed by one of the creditors (definition of the Supreme Court of the Russian Federation dated May 29, 2020 No. 305-ES19-26656).