The Supreme Court strengthens the position of creditors in the bankruptcy of loan guarantors

The Supreme Court of the Russian Federation (SC) today, June 27, discussed the draft resolution of the plenum concerning disputes about suretyship in bankruptcy cases. The project expands the rights of creditors in relation to bankrupt guarantors, consolidating the previously expressed positions and offering some innovations. The document (not yet adopted) is intended to replace the decision of the Plenum of the Supreme Arbitration Court No. 42 of July 12, 2012.

The arbitration manager Pavel Zamalaev positively assesses the project: “Systematization of legal positions regarding the application of suretyship rules in bankruptcy cases will help lower courts minimize the number of errors, and market participants understand the rules that can be relied upon.” Thus, the previously stated position is consolidated that banks do not need to advance the claim against the guarantor in order to initiate its bankruptcy. This will not be required from creditors who have bought such rights of claim from banks. Elena Gladysheva, managing partner of RI-Consulting, notes: this “will simplify the life of banks and their successors, given that, in general, the procedure for collecting debts under a surety agreement lasts about one and a half to two years.” The Supreme Court also offers the opportunity to restore the two-month period for submitting a creditor’s claim to the register of a bankrupt legal entity if there are good reasons for missing it (the law allows this only in bankruptcy of citizens).

In addition, the amount of the creditor’s registry claim against the guarantor may be greater than the amount of the claim against the borrower on this loan, the draft says. “Such a provision is permissible in a situation where the guarantor goes bankrupt later than the main debtor, and the interest accrued during the period between these events is included in the register of the guarantor. So far, there has not been a unified approach to this issue either in practice or in the community,” says Aleksey Sharov, managing partner of Averta Group. Orchards Counsel Vadim Borodkin considers this proposal controversial, since it “expands the protection of the interests of such a creditor to the detriment of the interests of the debtor and its other creditors” and makes it “beneficial to delay filing a claim against the guarantor.”

Lawyers were also ambivalent about the provision of the project, according to which the guarantor, who partially repaid the debt to the creditor for the bankrupt, cannot replace him in the register until the debt is fully repaid. In this case, the Supreme Court suggests, the guarantor has the right to participate in the meeting of creditors of the bankrupt debtor, but without the right to vote. And if such a guarantor is affiliated with the debtor, then his claims will be completely subordinated (lowered in order), which reduces his chances of receiving money to almost zero. Dmitry Igumnov, managing partner of Igumnov Group, considers this approach “pro-creditor”, pointing out that the guarantors face a dilemma: “Either pay the entire debt to the creditor for the main obligation, then you can claim at least something from the bankruptcy estate. Or pay a part, but then you need to wait for the repayment of the debt to the creditor in full before you yourself claim to receive money from the debtor.

Anna Zanina