THE SUPREME COURT WILL SORT OUT THE UNDERESTIMATION OF THE VALUE OF THE SUBJECT OF THE AUCTION

As part of the bankruptcy case (No. A32-28030/19), auctions were held for the sale of the debtor's property. The initial and repeated auctions were declared invalid, and the property was sold to a person with a pre-emptive right at a price 20% lower than the original sale price.

The corporation and one of the bidders filed demands for the recognition of the initial and repeated auctions as invalid due to a significant underestimation of the value of the property, indicating in support of their arguments that the subject of the auction could be sold at a higher offer price, which was not done by the managers.

The courts of three instances rejected the applicants' arguments with reference to the fact that, in case of non-conclusion of the contract of sale on the terms of the first and second attractive price offers, the manager has no right to consider the third, fourth and subsequent price offers of bidders in order to conclude a contract of sale of the debtor's property, even if these offers are higher in terms of price the one for which the property is offered for further sale.

The courts also pointed out that the price at which the property was actually alienated was about 80% of the initial sale price determined by the appraiser, recognizing such a sale as successful.

The Supreme Court of the Russian Federation referred the applicants' complaints to the judicial board and reflected the arguments of the cassators that in the case in question there were actions that distort the very essence of the auction, as a result of which the property was sold at a price that is significantly lower than the price of any of the proposals made by the participants during the first and repeated auctions.