THE SUPREME COURT OF RUSSIA ALLOWED BANKRUPTCY TRUSTEES TO REQUEST INFORMATION ABOUT PRE-FORECLOSURE TRANSACTIONS OF DEBTORS

The Supreme Court of Russia pointed to the possibility of sending personal inquiries to government agencies about pre-foreclosure transactions concerning the debtor's property for bankruptcy trustees. This will not only shorten the procedure time, but also simplify the process of challenging transactions.

Such a question arose in the framework of the insolvency case of Alliance-Stroy LLC, the information on transactions with property of which the bankruptcy trustee decided to request from the Russian State Register.

The fact is that the trustee asked to provide him with copies of contracts with the debtor's property, which was alienated before the company was declared insolvent.  The state body rejected the application, having noted that it had the right to provide documents that are related only to the objects owned by debtor at the moment of the company's bankruptcy.

The trustee challenged the refusal of the Russian State Register, and the first two instances supported him, but the district court indicated that the documents necessary for the applicant must be requested through the court, otherwise the Russian State Register would incur ‘unjustified costs’.

Then the trustee went applied to the Supreme Court of Russia and succeeded there.

The Economic Board recognized the Russian State Register’s refusal to be illegal and indicated that the position of the registering authority poses obstacles to the trustee in the implementation of his activities.

The problem of obtaining the necessary information occurs in bankruptcy cases quite often.  Former heads of bankrupt companies are often in no hurry to hand over the necessary documentation, and government agencies do not always perceive bankruptcy trustees as persons entitled to receive it without trial.  Now the legal position expressed by the Supreme Court can become a help for bankruptcy trustees.