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Practices

Bankruptcy

«In the real world, there are not so many defeated, much more those who did not try to fight…» —

V. Vishnyakov

The number of insolvency (bankruptcy) trials is increasing year by year. 

The North West region, one of the largest geographic areas of the Company services, is a leader in the number of insolvency proceedings, leaving behind the central and metropolitan area.

The company chose specialization in bankruptcy as one of its main activities. This strategy predetermined formation of an experienced team of professionals being the core of practice of insolvency (bankruptcy) proceedings support. 

Rightmark Group provides support of insolvency (bankruptcy) proceedings since its establishment. Experience gained over the years allows us to take a proactive role and ‘give pre-emptive strikes’, thus preventing violation of client rights during bankruptcy proceedings. Optimization of effective spending of client’s funds and time is our main objective. Therefore, lawyers of our firm, above all, attempt to prevent infringement of rights, since restoration of an infringed right usually involves greater expenses.

Any insolvency (bankruptcy) proceedings are supported as a single comprehensive project including legal, tax, civil and economic aspects.

The company regularly reviews the client business situation timely providing the necessary guidelines for prevention of bankruptcy of a client and its contractors. Such project work in many cases begins long before bankruptcy of a client or its contractor, and often allows to avoid it altogether. Rightmark Group priority is maximum protection of client rights, which does not always involve controlled liquidation of a debtor, but is often achieved by re-establishing solvency and replacing assets of the latter.

A project approach that is taken into account during development of a legal strategy for insolvency proceedings allows to ensure the maximum protection of rights of persons involved in the bankruptcy case from possible violations by parties to a case, insolvency managers, which, unfortunately, are so common today.

Services within the practice

Project work regarding bankruptcy proceedings includes but is not limited to the following stages:

  • Measures aimed at prevention of bankruptcy of a debtor or its contractors, including: economic and legal analysis of risk-related portfolios, negotiation and claim-related procedures, etc., assessment of risks associated with planned bankruptcy case initiation; 
  • development of a legal strategy for a person involved in proceedings, and protection of interests of persons involved in insolvency proceedings; 
  • performance of necessary procedural actions in insolvency proceedings within the framework of the developed legal strategy and taking into account actions of persons involved in insolvency proceedings; economic, administrative and criminal law measures aimed at enforcement and protection of client rights in insolvency proceedings, including but not limited to:

preparation and submission of a bankruptcy petition;

- filing of applications of creditors on inclusion of their claims in the list of debtor’s creditors;

- application of interlocutory injunctions;

- analysis of creditor claims to avoid inclusion of claims of bad faith creditors in the list of creditors;

- participation in meetings/committees of creditors;

- assessment and, if necessary, challenge of decisions of general meetings of creditors;

- assessment of analysis of debtor financial situation, report on absence of deliberate bankruptcy indications, submission of relevant

objections;

- legal support of insolvency manager approval procedure;

- provision of insolvency manager compliance with applicable statutory requirements during performance of the duties;

- dismissal of an insolvency manager violating the applicable legislation;

- assessment and, if necessary, challenge of company asset stripping transactions concluded earlier by a debtor;

- return of property that was unlawfully disposed of;

- bringing persons controlling the debtor (manager, founder, etc.) to joint responsibility (i.e. persons are responsible for debts of a

corporate debtor with their own personal assets);

- recovery of damages caused by insolvency manager;

- filing to law enforcement authorities of a crime report subsequent to bankruptcy proceedings;

- provision of information support for the purpose of obtaining data on debtors, their affiliated and controlling persons, and financial

situation, from publicly available sources;

- protection of interests of a debtor and its shareholders in case of attempts of company takeover by means of initiation of bankruptcy

proceedings.


The court dismissed a bad faith bankruptcy trustee thanks to efforts of Rightmark Group lawyers.
The court dismissed a bad faith bankruptcy trustee thanks to efforts of Rightmark Group lawyers.

Within the scope of LLC DOK bankruptcy proceedings, a bankruptcy trustee appointed by court did not perform duties imposed thereon in good faith: failed to take measures aimed at decrease of current lease payments of the debtor, did not sign a settlement agreement approved by all bankruptcy creditors, except for the creditor to which a bankruptcy trustee was an interested party.
Due to inequitable conduct of the bankruptcy trustee and interest thereof with regard to one of the creditors, bankruptcy creditors applied to the court with a complaint against actions of the bankruptcy trustee and a motion to suspend the latter from duties imposed thereon. Interests of bankruptcy creditors were represented by Rightmark Group lawyers.
The first instance court dismissed both the complaint and the motion. Rightmark Group lawyers, however, convinced the court of appeal that the bankruptcy trustee acted in bad faith, and violations committed by him were material. The court of appeal cancelled the first instance court ruling and suspended the bankruptcy trustee from duties imposed thereon.

 
Rightmark Group lawyers provided support of insolvency proceedings of a liquidated debtor – a major construction company.
Rightmark Group lawyers provided support of insolvency proceedings of a liquidated debtor – a major construction company.

In the process of liquidation of a legal entity being a part of the group of companies of one of the largest developers in St. Petersburg Rightmark Group lawyers revealed outstanding accounts payable and decided on the need to liquidate the company in a manner laid down by the bankruptcy law. Rightmark Group lawyers acted in the best interests of both liquidated debtor and its creditors, facilitated significant acceleration of judicial and administrative procedures aimed at the debtor liquidation.

Rightmark Group lawyers protected interests of a debtor – a major agricultural enterprise, and the debtor’s creditors.
Rightmark Group lawyers protected interests of a debtor – a major agricultural enterprise, and the debtor’s creditors.

LENOBLIMUSHCHESTVO brought an action against LOGUP Krasny Pakhar, represented by Rightmark Group, for termination of a right to permanent (perpetual) use of a land plot with an area of over 20,000 ha in Boksitogorsky district of Leningrad Oblast. According to the Plaintiff, the Defendant was to have been deprived of this right, as the land plot was not used for more than three years, starting from 2007. In proceedings before the first instance arbitration court the lawyers proved the fact of partial use of the land plot as intended, which was also recorded in a certificate of audit of compliance with the land legislation.
However, the main reason for claim dismissal was a major violation by public law enforcement bodies of the procedure for forced deprivation of the defendant right to permanent (perpetual) use. In the case under consideration, a notice was issued prior to accumulation of facts, and a penalty was charged only a year after, in fact, as a sanction for another offence. Under such circumstances, the court had no reason to satisfy the asserted claims. The arbitration court of appeal upheld findings of the first instance court. The plaintiff filed a cassation appeal from the trial court and a court of appeal ruling, but the court of cassation upheld the ruling. 

 
Rightmark Group lawyers prevented asset stripping during fictitious debtor’s bankruptcy.
Rightmark Group lawyers prevented asset stripping during fictitious debtor’s bankruptcy.

After receiving, by false pretences, a short term loan from the client amounting to several hundred million roubles through a dummy company, its owner attempted to declare fictitious bankruptcy of the company and strip the assets (real estate) in order not to return the received amount of money. The debtor bankruptcy proceedings lasted over three years due to lots of abuses on the part of the debtor representatives, sole member and a person acting as the sole executive body. However, Rightmark Group lawyers succeeded in preventing a number of attempts to include in the list of creditors’ claims fictitious claims of creditors affiliated with the debtor and the sole member of the debtor, as well as stripping of the debtor's assets, ensured lawful bidding for sale of the debtor property and satisfaction of claims of the debtor’s creditors.

Rightmark Group ensured observance of rights of a minority creditor in course of bankruptcy of a debtor – LLC Novaya Gollandiya.
Rightmark Group ensured observance of rights of a minority creditor in course of bankruptcy of a debtor – LLC Novaya Gollandiya.

Despite the small amount of claims of the client (engineering company) and rather hostile, formal position of an insolvency receiver, Rightmark Group lawyers ensured observance of the client rights in bankruptcy proceedings: the customer claims were included in the list of the debtor's creditors in full, despite many objections by the insolvency receiver. This allowed to protect the client interests in such a massive case, where top priority was given to interests of major market players.

Rightmark Group lawyers defended interests of a minority creditor in course of major developer bankruptcy and prevented the debtor’s asset stripping.
Rightmark Group lawyers defended interests of a minority creditor in course of major developer bankruptcy and prevented the debtor’s asset stripping.

During bankruptcy of a company, one of the major St. Petersburg developers, persons controlling the debtor together with one of the two largest creditors of the debtor attempted stripping of the only asset — a shopping mall under construction. In order to serve the best interests of the client, it was decided to form a union between Rightmark Group lawyers with great experience and extensive knowledge in the area of bankruptcy, representing the client interests, and a bank — the debtor’s creditor with more than 50% of the total number of votes. This strategic decision allowed to prevent asset stripping, and protect interests of not only major creditors, but also those with less than 10% of the total votes in the list of the debtor’s creditors: property was returned to the bankruptcy estate and sold in an auction, claims of all creditors were satisfied. 

Rightmark Group lawyers prevented an attempt of illegal takeover of the debtor property.
Rightmark Group lawyers prevented an attempt of illegal takeover of the debtor property.

Administration of one of the municipalities misled management of Rightmark Group client, and forced the company management to approve the terms, knowingly unfavourable for the company, setting the amount of lease payment for the land designated for construction. After the new company management refused to pay the unreasonable land rent, the municipal administration initiated bankruptcy in order to seize the company property.
The insolvency receiver appointed by the administration acted solely in its interests: failed to act, without attempting to appeal against an illegal judgment delivered in favour of the administration, and created unlawful conditions for unreasonable increase in the amount of current payments in favour of the administration.
Thanks to efforts of our lawyers, the insolvency receiver was dismissed, the amount of losses incurred by the debtor’s creditors, except for the administration, was recovered from him. The new insolvency receiver redressed the balance of interests. Negotiations between our lawyers and the insolvency receiver resulted in conclusion of a settlement agreement which terms and conditions served the best interests of all the debtor’s creditors and the debtor itself.

 
Pavel Ilyinykh

Head of Dispute Resolution Practice    

Evgeniya Stanislavskaya

Senior Associate of Dispute Resolution Practice    

Alexandra Petrova

Senior Associate of Dispute Resolution Practice