Theoretically, a Russian debtor is able to reorganize. In practice, the law currently does not encourage voluntary restructuring of debt in a way designed to preserve the continued operation of business and jobs. The interests of debtors and creditors are not appropriately balanced at present to achieve the best results. Creditors currently have a strong incentive to aggressively pursue legal action against distressed businesses, to secure their vote at creditors’ meetings and the right to propose their own candidate to serve as an interim trustee.
An article outlining the main insolvency law in Russia, the Federal Law No. 127-FZ of October 26, 2002 “On Insolvency” (the “Law”) which deals with pre-insolvency re-organization and formal insolvency procedures including re-organization, has recently been published in Eurofenix, the official quarterly journal of INSOL Europe and examined this question. Click below to read the article.