Members of the Dispute Resolution Practice at Rybalkin, Gortsunyan, Dyakin & Partners (RGD), partners Yuri Makhonin and Vladimir Pestrikov, and counsel Varvara Voynova, held a business breakfast to discuss the current issues of transnational bankruptcy involving a Russian element in the era of sanctions. The event was held in partnership with PRObankrotstvo publication. Dmitry Popkov, Director of the Department of Special Projects of the Bank for Non-Core Assets TRUST, participated as an invited expert.

The business breakfast brought together over forty representatives of investment funds, problem debt experts, and corporate lawyers. The participants engaged in a discussion on the legalization of foreign and Russian bankruptcies in the era of sanctions. They also reviewed the latest trends and rules, as well as the approach to searching information on the beneficial ownership of debtors' property.

Yuri Makhonin shared the latest news about the recognition and enforcement of judicial acts of Russian courts in bankruptcy cases abroad in the context of sanctions. He noted that Russian businesses are facing problems that don’t let large creditors seek debt collection, which allows debtors to avoid their obligations. He told the participants that RGD is initiating transnational bankruptcy proceedings in several jurisdictions to tackle this challenge. He spoke about the advantages of this mechanism, and gave examples of the most high-profile cases of recent years initiated in the UK, the British Virgin Islands, France, Australia, and the USA.

Vladimir Pestrikov discussed the latest developments in bankruptcies involving foreign entities in Russia. In his presentation, he focused on two topics: initiating a bankruptcy of a foreign entity in Russia and the position of the Supreme Court of the Russian Federation on the involvement of foreign lawyers in disputes in the country. He talked about how Russian courts are adapting to global changes and how effectively this helps individuals from Russia exercise their right to access to justice and effective legal protection. He noted that the Supreme Court of the Russian Federation supports the right of creditors to open bankruptcy cases and exercise their rights in the jurisdiction in which the debtor's assets are located (according to the principles of cross-border bankruptcy developed in the UNCITRAL Model Law). He added that this practice is unlikely to spread given the current geopolitical circumstances. Vladimir noted that the existing sanctions affect another important aspect: they make it very difficult to engage foreign lawyers in advice on bankruptcy issues, search for property, and debt collection. The situation is additionally complicated by the dissent of regulators, even within the European Union, and the ban on providing legal assistance to Russian citizens in a number of jurisdictions.

Varvara Voynova covered the problems of searching for the property of debtors in case of cross-border bankruptcy, and finding information on the beneficial ownership of their assets. She reviewed cases related to the theft of funds, withdrawal of assets, and structuring of assets with the intention of hiding their beneficial ownership. Varvara noted that searching for assets and collecting debts abroad are costly, hence such activities should be considered by the plaintiffs as investments, and should be economically feasible, above all. Varvara provided an overview of the key tools for the related procedures (including Section 1782 of Title 28 of the United States Code) that help in finding information required to search for debtors' assets in foreign jurisdictions. She shared examples from the most high-profile cases of recent years, pointing out the unique tactical insights of lawyers that helped achieve positive outcomes in cross-border bankruptcy cases.

The invited expert Dmitry Popkov discussed his team's approach to searching and recovering assets. He shared cases from the experience of the Department of Special Projects of the Bank for Non-core Assets TRUST.