ALRUD Law Firm
  February 14, 2024 - Moscow, Russia

Supreme Court Allows Bankruptcy of Foreign Companies with "Close Connection" to Russia
  by Dmitry Kuptsov

The Supreme Court has considered the Westwalk case and ruled that foreign companies can be legally recognized as bankrupt if there is a "close connection" with Russia.

Bankruptcy of foreigners was first commenced in 2016, but for a long was applied only to individuals1.

The Arbitrazh Court of the Chelyabinsk Region opened Pandora's box in 2022 with respect to a company from the island of Nevis, which was only formally registered there. This approach was actively adopted by other courts, and in 2023 we saw an increase in such cases2.

The court's ruling in the Westwalk case summarised the practice of the lower courts and resolved important practical issues.

Who can be declared bankrupt?

Foreign companies that have a close connection with Russia in the following cases:

What assets are covered by bankruptcy?

It is now safe to say that both Russian and foreign creditors can commence bankruptcy proceedings with respect to both offshore companies and legal entities that are registered and act abroad and have a close connection with Russia.

For example, see Case No. ?41-72478/2019, ?28-8319/2016 and ?40-248865/2016, among others. Courts have actively started bankruptcy proceedings against foreign companies, for example, Delvenisto Investments LTD (Case No. ?40-5658/2023), Garant Bauinvestition GmbH (Case No. ?40-9555/2023), Retail Chain Properties (Case No. ?40-112325/2023), GEMONT ENDUSTRI (Case No. ?65-23218/2023) and others.

Read full article at: