Supreme Court allows companies to donate money to charity ahead of bankruptcy

Companies experiencing financial difficulties can donate money to charity, recognized by the Supreme Court of the Russian Federation (SC). Moreover, the burden of proving possible abuses in such cases falls on the person challenging the transaction, and the good faith of the charitable foundation is presumed, even if it is affiliated with the debtor and the money transfer is formalized as a loan. Lawyers say the decision essentially legitimizes the withdrawal of assets in the run-up to bankruptcy under the guise of donations to good causes, and they fear the popularization of such schemes, which became widespread back in the 1990s.

The Supreme Court ruled on a dispute over a company’s right to donate money to a charitable foundation affiliated with it shortly before bankruptcy. The bankruptcy trustee of the bankrupt JSC “Production Company Kuzbasstransugol” challenged the debtor’s issuance of a three-year loan for 70 million rubles. charitable foundation “Mirozdanie”. The arbitration courts declared the agreement invalid and recovered 81.3 million rubles from the fund. (with interest) to the bankruptcy estate.

The decisions say that the fund is connected with the bankrupt, since the founder of Mirozdaniya is a company that owns a stake in Kuzbasstransugol through other companies, and the entire group has a common beneficiary – Viktor Nusenkis. In addition, at the time the loan was issued, Kuzbasstransugol had unfulfilled obligations of 2 billion rubles, and six months before the bankruptcy, the fund’s debt was transferred to a Cypriot company affiliated with the bankrupt shareholder (see Kommersant on August 18).

The fund and the representative of the bankrupt shareholders filed a complaint with the Supreme Court, stating that the transfer of money was a donation, because all 70 million rubles. spent on charity. And according to an additional agreement with Kuzbasstransugol, the debt was forgiven if the money was spent on the statutory goals of the Universe. The case was brought before the Economic College of the Supreme Court, which supported the fund.

The Supreme Court concluded that the courts were mistaken in qualifying the relationship between the parties as a loan, since the interest of the charitable foundation was to receive and direct funds “for socially significant purposes”, and the company “clearly expressed its will that it would not have any claims to the foundation for the return of the transferred amount and payment of interest.” According to the board, this is a “type of donation” that falls under the norms of the Civil Code of the Russian Federation on donations, which can be canceled only if the funds are used for other purposes.

The transfer of debt to a Cypriot company, the Supreme Court decided, does not indicate “the absence of a donation,” just as there is no evidence that the fund was used for other purposes, “for example, for the withdrawal of assets, laundering, cashing out funds under the guise of disinterested generally beneficial activities.”

In addition, in order to challenge a suspicious transaction, it is necessary to establish that the counterparty should have known about the purpose of causing harm to creditors. But no concrete evidence of this was provided, the panel clarified. The Supreme Court also noted that Victor Nusenkis lost his status as a beneficiary of the group long before the mentioned events. The connection of one of the founders of the fund with the debtor does not mean his interest, since the founder “did not solely form” the management bodies (board, board of trustees and directors) of the fund, was not a member of them and could not give them mandatory instructions. Moreover, the Supreme Court emphasized, the fund is not obliged to check the “property status of the donor.” As a result, the court decisions were overturned, and the donation was recognized as legal.

Anton Krasnikov, partner at Sotheby’s law firm, says that there is no uniform practice in disputes over payments to charity and the position of the Supreme Court is intended to create one. Advisor to the dispute resolution and bankruptcy practice of BGP Litigation Ruslan Petruchak believes that the Supreme Court’s conclusion is correct that in fact it was a donation: “The name of the agreement often does not correspond to its essence, so one must proceed from the interpretation of the terms and purposes of the transaction.” In this case, the lawyer clarifies, the funds received by Mirozdanie “were transferred as donations for statutory purposes.”

At the same time, Case by Case lawyer Yulia Mikhalchuk notes that “in general, donations contradict the goals of creating commercial organizations, because they are created to make a profit, and not to transfer their assets free of charge.” Ruslan Petruchak agrees that “it is illogical to transfer money to charity if the company is already experiencing financial difficulties – it looks suspicious.”

According to Ms. Mikhalchuk, the courts usually easily cancel gratuitous transactions, especially if the donor had signs of insolvency, and the counterparty should have known about it: “But in this case, the standard of proof dropped sharply, since the Supreme Court decided that the fund, in principle, should not be interested in material the condition of the donor. This looks like double standards for transactions depending on who the debtor’s counterparty is.” Mr. Krasnikov adds that it is more difficult to prove the interest of a charitable foundation and its awareness of a violation of the rights of creditors than for an ordinary counterparty.

At the same time, notes Ruslan Petruchak, according to Art. 16 of the law on charitable activities, the fund can allocate up to 20% of the funds spent per year on salaries, which sometimes becomes “veiled dividends.” As a result, the lawyer adds, the scheme of “transiting money through a charitable foundation” was popular both in the 1990s and today. At the same time, he admits, one must look at the future fate of the money received: if it is spent for statutory purposes, this cannot be called dishonest actions.

Yulia Mikhalchuk fears that the decision of the Supreme Court could “exacerbate the situation in bankruptcies with a hint of smell” and the withdrawal of assets under charitable pretexts will gain popularity. Anton Krasnikov also sees “the risk that such schemes will be more boldly used by unscrupulous debtors.”

Ekaterina Volkova, Anna Zanina