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Print articleMoratorium on Bankruptcy Proceedings
April, 2020 - Sergey Petrachkov, Magomed Gasanov
In an expedited process, a Federal Law amending several legislative acts was passed by the State Duma and Federal Council of the Russian Federation. In particular, the law envisages use of the power of the Government of the Russian Federation to impose, in extraordinary cases, a moratorium on insolvency proceedings and provides a legal regime of such moratorium. It is highly likely that the law will be signed by the President of the Russian Federation in the nearest future and will become effective on the day of its official publication.
The proposed amendments, in general, are in line with the similar measures being adopted in other countries, in order to avoid mass bankruptcies, amid an economic crisis.
In light of the proposed amendments, we would like to draw the attention of our clients and colleagues to the main provisions and problematic issues of the adopted law.
- The scope of application of the moratorium
The moratorium will not apply to all debtors, but only to certain categories of entities. The respective list will be determined by the Act of the Government of the Russian Federation, indicating codes of Russian National Classification of Types of Economic Activity, or a list of categories of entities, which suffered from the circumstances, in connection to which the moratorium was introduced (“Debtors”). At the moment, there is no information on the possible categories of debtors, with respect to which the moratorium will be introduced. However in the course of a teleconference on 25th March 2020, the President of the Russian Federation, Vladimir Putin, noted that this will concern the debtors “that work in sectors, most affected by the current complex situation”.
This furthermost distinguishes the Russian law from the foreign analogues, as most of the latter introduce the moratorium on all debtors.
Besides, it is yet unclear whether the moratorium will extend to the insolvency of individuals, as the law does not mention it directly. Applying the rules of application of general rules of Bankruptcy Law to the insolvency cases of individuals, we presume that the moratorium will be effective with respect to them, as well.
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