Dmitry Yakushev, AGP attorney and member of AGP’s Dispute Resolution team took part in the annual conference “Bankruptcy 2021: A New Vaccine or Poison to Businesses?” held by Kommersant, where he delivered a report on “Personal Bankruptcy of Business Controlling Persons”.
Dmitry spoke on the most recent court approaches to resolution of disputes among creditors and debtors in rather sensitive, personal spheres, such as payment of alimony and levy of execution on one’s only residential property.
In particular, one of the problematic issues in an individual’s bankruptcy proceedings is overestimated alimony paid for subsistence of the debtor’s children. Not infrequently debtors acting in bad faith refer to their children as “transit” of money, artificially overestimating their alimony obligations and thus avoiding repayment of debts. Dmitry told how courts try to find a balance between creditors’ interests and those of the debtor’s children, and in which events forced reduction of alimony payments is allowed.
Dmitry also dwelled on a revolutionary resolution of the Russian Constitutional Court, which allows creditors to overcome the enforcement immunity against debtor’s only residential property in a situation where there is an obvious disparity between the property’s value and the debtor’s debt. For a long time unfair debtors have been able to make so that their luxury property be regarded as their only residential property, thus preventing its sale for making settlements with their creditors.
Following the Russian Constitutional Court, the RF Supreme Court also set the procedure for exchange of debtor’s superfluous residential property for a more moderate one. According to Dmitry, courts will have to elaborate nuances of this legal mechanism. Nevertheless he thinks the higher courts’ position is a big step in the bankruptcy anti-abuse movement.