Bankruptcy Law in Russia

Russian Bankruptcy Law

Bankruptcy in Russia

Legal aspects of the bankruptcy procedure in Russia

Bankruptcy procedure in Russia

Insolvency process in Russia

Russian bankruptcy procedure

Russian insolvency process

Bankruptcy process in Russia

Insolvency procedure in Russia

Russian bankruptcy process

Russian insolvency procedure

  Russia has had a series of insolvency regulations and laws in place since 1992, which have been subject to regular changes and amendments. Russian insolvency law is rather extensive and provides several options, including reorganization and rehabilitation of an insolvent company and debt rescheduling for individuals, as an alternative to liquidation/bankruptcy.


Russian insolvency rules are applicable to both companies and individuals, including those who are not engaged in any business activities. Separate specific rules are applied with respect to bankruptcy of core companies, farms, financial organizations (e.g., banks, insurance companies, etc.), strategic enterprises, natural monopoly entities and developers.


Insolvency and restructuring in Russia is governed by Part I of the Civil Code of the Russian Federation and by Federal Law No. 127-FZ dated 26 October 2002 “On Insolvency (Bankruptcy)” (as amended) (“Insolvency Law”). In addition, there are extensive rules and regulations adopted by the government, the Ministry of Economic Development and various state bodies, in addition to court decisions of the RF Supreme Court and other courts, designed to standardize insolvency in practice.


Bankruptcy law is an area of law with extremely complex and intricate legal provisions, which requires the assistance and advice of dedicated professionals. The dedicated Bankruptcy Practice at «Consul & Rubicon» is distinctive from other law firms. 

Engaging experts to represent parties in bankruptcy proceedings helps to efficiently address and solve problems, taking into account the numerous legal conflicts existing in the Law that surface only through litigation.

Presently, the «Consul & Rubicon»’s attorneys possess vast practical experience, are equipped with knowledge of a variety of methods to counter unscrupulous debtors and protect parties to bankruptcy proceedings, and have document templates allowing for prompt response to any changes in bankruptcy procedures and saving client’s time.

Practically every bankruptcy case we worked on stretched far beyond the bankruptcy court proceedings themselves. The objectives of each of these projects are to: untangle the schemes used to siphon off money or other debtor’s assets; dispute dubious transactions made by the debtor on the eve of bankruptcy; take action against managers and owners and other steps.

The remedies that the «Consul & Rubicon»’s experts may use include, but are not limited to, the following:

-drafting and filing petitions for debtor's bankruptcy;

-including a creditor in the register of creditor claims;

-disputing claims made by unscrupulous creditors;

-participating in creditors’ meetings/ committee meetings;

-objecting to debtor’s financial standing analysis, opinions confirming absence of premeditated bankruptcy signs;

-reporting crimes in connection with bankruptcy proceedings to law enforcement authorities;

- legal representation in court;

- inventory-taking of the debtor’s property;

- selection of a candidature of the court-appointed manager, control of his activities;

- negotiations between the parties with the purpose of conclusion of the amicable settlement agreement;

- collection of the accounts receivable to the debtor;

- organization of competitive bidding.

The main sources of legal regulation relating to bankruptcy in Russia are the following:

Part 1 of the Civil Code of the Russian Federation as of November 30, 1994 (hereinafter referred to as the "Civil Code of the RF");

the Federal Law No.127-FZ dated October 26, 2002 "On Insolvency (Bankruptcy)" (hereinafter referred to as the "Law on Bankruptcy");

An insolvency (bankruptcy) is an inability, which has been recognized so by an arbitration, of a debtor to satisfy in full the claims of his creditors relating to financial liabilities of that debtor and/or to settle the mandatory payments.

Insolvency (bankruptcy) proceedings in Russia can be initiated either by a creditor or the debtor.

Any creditor (including ex-employee) can initiate bankruptcy proceedings, provided the debt owed by the company to such creditor (i) is confirmed by a court decision or an arbitral award; (ii) exceeds RUB 300,000 (approximately USD 4,500 at the current exchange rate); and (iii) is at least three months overdue.

The same is applicable to bankruptcies of individuals with the exception that the debt must exceed RUB 500,000 (approximately USD 7,500).

It should be noted that to initiate the bankruptcy proceedings the debt shall be of principal nature, i.e., the financial penalties are not included within the threshold necessary to initiate bankruptcy proceedings.

Credit institutions (including state corporation “VEB.RF”), tax authorities may initiate bankruptcy proceedings without the court decision requirement.

The law requires bankrupt companies and individuals to file for bankruptcy within one month from the moment when insolvency indications occur (i.e., when it becomes clear that satisfying one creditor would make it impossible to satisfy other creditors in full, or if the debtor is more than three months late in paying salaries to its employees, etc.).

Starting from 1 January 2018, the debtor’s creditor, the debtor, the employee or the former debtor’s employee may file for bankruptcy and initiate the bankruptcy proceedings only if they published a prior notice on their intention to file for bankruptcy to the Unified Federal Register of the information on legal entities’ activities. Such notice shall be made no later than fifteen (15) calendar days before the bankruptcy petition is filed to court.

Under the Bankruptcy Law, the debtor must file an application with the court for its bankruptcy if it is unable to fulfil its outstanding obligations and its overall indebtedness exceeds RUB 300,000 (approximately USD 4,500) for companies and RUB 500,000 (approximately USD 7,500) for individuals.

The financial sanctions are not included within the threshold necessary to initiate bankruptcy proceedings.

In practice, in order to avoid initiation of bankruptcy proceedings, debtors used to repay the debts partially so that they became lower than the threshold provided by the law. However, the Supreme Court of Russia held that, if the debtor partially repays debts for a long time so that the amount of each outstanding claim remains less than the threshold for imposing a bankruptcy procedure on the debtor (RUB 500,000 for individuals or RUB 300,000 for legal entities), then the claims of several creditors can be considered cumulatively. In this regard, if the cumulative sum of several claims exceeds the threshold (RUB 500,000 or RUB 300,000), the bankruptcy procedure can be initiated.

Moreover, in accordance with the Supreme Court judicial review of March 2018, even claims for the recovery of court fees can trigger the initiation of bankruptcy proceedings.

It should be noted that the company’s director is obliged to file a bankruptcy petition with a court to declare the company bankrupt within the period of one month from the moment when a reasonable director should have known about the company’s insolvency and the insufficiency of funds/assets to meet the company’s obligations. Namely, the director should file for bankruptcy if:

• fulfilling the obligations of one or several creditors makes it impossible for the debtor to fulfill the obligations of other creditors;
• foreclosure of the debtor’s property will significantly complicate the business activity of the debtor or will make it impossible;
• the debtor shows indications of insolvency and (or) insufficiency of the funds; etc.

In case of failure to submit such a petition, the director will be held secondarily liable. The Bankruptcy Law extends the liability for failure to file for bankruptcy to shareholders, in addition to the director. Shareholders are obliged to convene a general meeting to decide to file for bankruptcy if the director failed to do so when the company showed signs of insolvency. All persons at fault are held jointly liable.

The debtor is also obliged to publish a prior notice on its intention to file for bankruptcy to the Unified Federal Register of the information on legal entities’ activities no later than 15  calendar days before the bankruptcy petition is filed to court.

The court judgment requirement was designed to protect debtors from frivolous filings. The downside of it is that it causes delays for creditors seeking to quickly initiate the procedure. This rule has an exception for credit institutions, which may initiate bankruptcy proceedings without a court judgment based on signs of insolvency of the debtor, provided they file a notification with a public state registry 15 days prior to initiating such proceedings. Under current court practice, the term “credit institution” covers not only banks with a Russian license, but banks with licenses under their law of incorporation as well. Furthermore, tax and customs authorities are also authorized to initiate bankruptcy proceedings without a court judgment 30 days after the relevant authority rendered a decision to collect the amounts due from the debtor.

The following procedures are applied in the course of consideration of debtor's case, whilst a debtor is a legal entity:

supervision (nablyudeniye) – a procedure, which is applied in the course of bankruptcy proceedings to a debtor in order to secure a debtor's property, to carry out the analysis of a debtor's financial standing, to prepare a register of that debtor's creditors' claims and hold the initial meeting of creditors;

financial sanation (finansovoe ozdorovleniye) – a procedure, which is applied in the course of bankruptcy proceedings to a debtor with a view to recover that debtor's solvency and to repay debts in accordance with a schedule of debts repayment;

external management (vneshneye upravleniye) – a procedure, which is applied in the course of bankruptcy proceedings to a debtor in order to recover that debtor's solvency;

receivership (konkursnoye proizvodstvo) – a procedure, which is applied in the course of bankruptcy proceedings to a debtor that has been declared bankrupt with a view to a proportioned satisfaction of the creditors' claims;

amicable settlement (mirovoye soglasheniye) – a procedure, which is applied in the course of bankruptcy proceedings at any of its stage with the purpose of termination of the proceedings by way of reaching an agreement between a debtor and its creditors.

If a debtor under bankruptcy proceedings is an individual then the following procedures apply:

receivership;
amicable settlement;
other procedures as provided for by the Law on Bankruptcy.

«Consul & Rubicon» specialists are ready to render all types of professional legal services regarding insolvency and other adjacent spheres, including:

Consulting liquidators (or all-inclusive support of insolvency/bankruptcy proceedings);

Consulting and representing interests of insolvent debtors’ creditors during insolvency procedures;

Protecting debtors’ interests during insolvency procedures;

Developing possible procedures of restructuring obligations and existing measures for securing performance of obligations in compliance with bankruptcy laws.

CONSUL & RUBICON Law firm LLC bankruptcy team has extensive experience in providing appropriate support for company bankruptcy procedures and acting for creditors during troubled debt recovery in various areas of business. This helps our lawyers evaluate correctly the prospects for debt repayment by troubled debtors, select the best option for a client for settling troubled debts and make sure all the client's claims are satisfied as far as possible during debtor bankruptcy procedures.

Call us or make an appointment to get free advice from our expert.

Postcode 404130 Russian Federation,
Volgogradskaya oblast, city Volzhskiy

Lenin Avenue Building 20 V  office 11
(Office Center "Staraya Ploshchad")

Call us: office phone +7 (8443) 41-28-81
mobile phone +7-902-362-70-56
Contact us: e-mail: konrub@bk.ru 
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