Presently, since the lapse of the Law of the Russian Federation «On pledges» of May 29, 1992 No. 2872-1 (as amended on 06.12.2011, with the Amendments and Additions of January 1, 2013) on July 1, 2014 basic standards on pledge are contained in articles 334 - 358.18 of The Civil Code of the Russian Federation (part one) of November 30, 1994 No. 51-FZ (as amended on 31.01.2016) and Federal Law of 16.07.1998 No. 102-FZ (as amended on 05.10.2015) «On hypothecation (mortgage)».
Talking about general innovations, experts note that the pledge is considered as a burden, not as contractual arrangements as it was before.
Now the pledge of personal rights is specified in 8 articles of The Civil Code and 6 articles are devoted to the pledge of rights under a bank account agreement. Handling procedures of the pledge of rights under a bank account agreement are significantly simplified and the efficiency of the pledge as provisional measure was increased.
To the list of regulations for pledge of inventory and pledge of things in a pawnshop the following statements were added: statements on pledge of rights of corporate members, pledge of securities and pledge of exclusionary rights.
Now the change of physical or legal condition of the pledged item doesn’t influence on the pledge. The subject of the pledge can be the property and rights, which are planned to acquire by the pledger in the future. Besides, the pledge value can remain unchanged regardless of the market situation unless otherwise is prescribed by the pledge agreement.
Requirements to the form and terms of the pledge agreement are significantly simplified. To specify the subject of the pledge, content, size and terms of fulfillment of the obligation is not mandatory now. It is possible, if the agreement includes the references to the document in which the obligation was created.
The list of cases, requiring mandatory state registration of a pledge, was expanded. For example, registration of the pledge of property, the rights on which are the subject to state registration, i.e. hypothecation, is mandatory now. Registration of the pledge of participants’ rights in limited liability company, pledge of securities and the pledge of rights under a bank account agreement is also mandatory now.
Finally, the Registry of notifications on a pledge of movable property was created and successfully operates. The Registry maintenance is regulated by the Federal Law «On Foundations of the legislation on the Notary Service» (approved by Supreme Court Of The Russian Federation on 11.02.1993 № 4462-1) (as amended on 29.12.2015) (with the Amendments and Additions, which came into force on 01.01.2016). The implementation of voluntary registration of movable property pledges allows to securely protect the rights of a mortgagee, as well as third parties.
When dealing with bankruptcy cases in Russia one has to observe the following: Creditors, an authorized body such as the Federal Tax Service or a company-debtor are authorized to file bankruptcies in arbitration courts. If a company realizes that it will not be able to meet its financial liabilities when due it must file bankruptcy.
At the same time the company involved in a bankruptcy case must complete its own bankruptcy filing upon becoming insolvent or has determined that it will not be able to settle its liabilies
There are 2 sources authorized by the State where the information about the bankruptcies & claims are filed and published:
- The Unified Federal Register of Bankruptcy Information (EFRSB),
- Database of bankruptcy (insolvency) announcements provided by the «Commersant» newspaper.
According to the Federal Law No. 296-FZ as of 30 December 2008 «On Amendments to the Federal Law «On insolvency (bankruptcy)» bankruptcy commissioners are obligated to disclose for the Unified Federal Register of Bankruptcy Information the following data:
- introduction of supervision, financial restructuring, external management, declaring a debtor bankrupt, initiation of the bankruptcy proceedings;
- termination of the bankruptcy proceedings;
- appointment, discharge or dismissal by the bankruptcy commissioner;
- intention to pay outstanding receivables as was claimed by creditors;
- compulsory (judicial) sale procedures and their results;
- cancellation or change of data in judicial files;
- other information prescribed by the law.
The newspaper «Commersant» is the legal gazette for publishing information on bankruptcies according to the Decree of the Government of the Russian Federation No. 1049-r as of 21 July, 2008. The announcements of bankruptcy and legally relevant events should be published in Saturday’s issues of «Commersant». The following data has to be reported:
- full name of a debtor;
- location of the debtor;
- ID codes: Primary State Registration Number (OGRN), Primary State Registration Number of the Sole Entrepreneur (OGRNIP), Tax number (INN);
- Arbitration court accepted the judicial file, the date of accept, the reference to the bankruptcy case title as well as the number of bankruptcy case;
- surname, name and patronymic of the appointed bankruptcy commissioner;
- correspondence address of the arbitration administrator;
- full name and address of the self-regulatory organization (SRO) where the bankruptcy commissioner is a member;
- date of the court session related to the bankruptcy proceeding;
- other information prescribed by the law.
The information published in both sources completes the data disclosed by arbitration courts particularly as concerns announcements relevant to all past, present and future stages of bankruptcy proceedings. The EFRSB and “Commersant” are the only sources where news about compulsory (judicial) sale procedures and their results are reported.
Careful study of arbitration practices of business partners, particularly in regard to eventual bankruptcy proceedings, which have been ordered are obligatory components of the counterparty check. For instance, there is a potential chance to overlook the first claim related to a bankruptcy against the counterparty, this needs to be avoided.
All stages of the bankruptcy procedure of a Russian business partner can be also studied on-line in English in the subscription based business information System Globas-i® of Credinform (Russia).
Performing fresh investigations on Russian companies Credinform, experts always verify bankruptcy announcements in official sources as mentioned above and to provide such data in credit reports.
For more detailed information about bankruptcy dynamics in Russia please see “Bankruptcies and Registrations in Russia – Dynamics 2015”