The Supreme Court will deal with the application of the bankruptcy moratorium in 2022

The Supreme Court of the Russian Federation (SC) will decide who can be exempted from paying penalties during the bankruptcy moratorium of 2022. The district cassation decided that the moratorium does not apply to those who, in fact, did not suffer from sanctions, but simply evaded paying the debt. The debtor disputes this approach, insisting on the totality of the moratorium and the extension of its protection to everyone, regardless of signs of insolvency. The Economic Board of the Supreme Court must put an end to the dispute. Courts and lawyers do not agree on how important the direct impact of sanctions on the defendant is and what other conditions are required to avoid penalties.

The Supreme Court will consider the issue of who is covered by the 2022 bankruptcy moratorium in terms of waiving the accrual of penalties. The decision will be made within the framework of a dispute between Energocontrol LLC, which requires, among other things, 1.5 million rubles under a loan agreement with Garant Energo LLC. penalties from January to March 2021 and further until the day of actual payment of the debt, as well as interest for the same period.

The right of the Russian government to declare a moratorium appeared in the bankruptcy law in April 2020 (Article 9.1). The measure prohibited creditors from initiating bankruptcy of debtors and provided a number of other reliefs, in particular, it exempted persons subject to the moratorium from the accrual of penalties for unfulfilled obligations. The moratorium was first introduced to save businesses from the consequences of the pandemic and was in effect from April 2020 to January 2021. The second time it was announced from April to October 2022 as an anti-crisis tool to minimize the consequences of sanctions and ensure economic stability.

But if the first (coronavirus) moratorium limited the circle of protected persons to the list of industries affected by the pandemic, the second (sanctions) was total and applied to all participants in civil law relations (including individuals), with the exception of a few exceptions. They dealt with developers with problematic properties on the register and persons included by the government in a special list (this could be, for example, foreign agents).

In February 2023, the Arbitration Court of the Nizhny Novgorod Region partially satisfied the demands of Energocontrol, collecting 2.27 million rubles. penalties. But the court refused to collect a penalty for the period from April 1 to September 9, 2022, citing a moratorium. The plaintiff did not agree with the application of the measure to the defendant and appealed the decision. The appeal upheld it, but the court of cassation supported the plaintiff.

According to the cassation, the penalty for the period of the moratorium could have been recovered, and the lower courts did not appreciate the arguments that “the defendant did not suffer from the circumstances that served as the basis for the introduction of the moratorium” and his actions “aimed at evading payment of the debt are unfair ” As a result, the cassation sent the case in this part for a new consideration, ordering the first instance to check the arguments.

The defendant did not agree with this by filing a complaint with the Supreme Court. Garant Energo insisted that the cassation position was erroneous, believing that “the moratorium rules apply to all participants in civil law relations, regardless of whether they have signs of insolvency or insufficient property or not.” According to the petitioner, the moratorium should apply to all but the exceptions expressly specified by the government, to which the respondent does not apply. The case was transferred to the Economic Collegium of the Supreme Court, scheduling a meeting for February 27.

The introduction of the 2022 moratorium was due to a number of reasons, including “the introduction of sanctions, the withdrawal of Western companies from the Russian market, the disruption of supply chains,” explains Ivan Stasiuk, advisor to the RKT consulting group: “We cannot talk about protecting only those on the sanctions lists, since the influence could be of an indirect nature.” First of all, the 2022 moratorium was important for small businesses, which have few resources to adapt to changed realities, says Anastasia Efimova, corporate practice lawyer at Pen & Paper.

Yurtechconsult project manager Evgeniy Vedilin considers it fair to extend the sanctions moratorium to all persons, regardless of industry, since the consequences of the sanctions “affected everyone to one degree or another and it was necessary to give everyone the opportunity to survive such difficult times.”

At the same time, lawyers admit, the courts do not have a uniform opinion on this issue. According to the observations of the head of the judicial and arbitration practice of Asto Consulting, Veronika Chelnokova, most often the courts adhere to the literal interpretation of the “totality of the moratorium” and apply the rules on the non-accrual of penalties to all categories of debtors. Indeed, “the courts for the most part do not analyze whether the debtor suffered from the circumstances that served as the basis for the introduction of the moratorium,” notes Ms. Efimova. But there are other decisions when the courts refuse to extend the moratorium to the defendant, considering that the measure is aimed only at protecting persons affected by the negative consequences of the events of 2022.

Even within the Armed Forces there are different approaches. Thus, in October 2023, the administrative collegium of the Supreme Court, as part of a dispute on the suspension of enforcement proceedings against persons subject to a moratorium, limited the circle of debtors only to those against whom a bankruptcy case had already been initiated.

In addition, lawyers say, we must not forget about the possibility of abuse by debtors who could afford to pay the debt, but did not do so under the guise of a moratorium. To cut off such persons, the Supreme Court provided clarifications in the resolution of the plenum No. 44 of December 24, 2020, during the period of the coronavirus moratorium. Paragraph 7 of the document stated that the creditor could prove the defendant’s actions were dishonest and then the moratorium protection would not be applied to the latter. The plenum did not issue such clarifications on the application of the 2022 sanctions moratorium, but, according to lawyers interviewed by Kommersant, Resolution No. 44 can be applied to subsequent moratoriums.

The opinions of lawyers themselves also differ. Evgeniy Vedilin believes that the provisions of the 2022 total moratorium regarding the accrual of penalties should apply only to those affected by sanctions. Anastasia Efimova believes that it is most effective to extend the moratorium to all persons who have not fulfilled their obligations. Mrs. Chelnokova agrees with her.

At the same time, all lawyers support the creditor’s right to prove the bad faith of a particular debtor. “If it is proven that the crisis did not affect the debtor, then it would be incorrect to apply a moratorium to him,” says Ms. Efimova. Veronika Chelnokova emphasizes that “the burden of proof lies precisely with the creditor, who is often limited in the ability to obtain information about the economic activities of the counterparty.”

As such evidence, the courts may take into account, for example, that the obligation arose long before 2022 and the sanctions, and the debtor company showed successful financial results at the end of the year, Ms. Chelnokova clarifies. According to Ivan Stasiuk, the direct impact of sanctions on the debtor is not so important; the main thing is his financial and economic situation: “If it is proven that the debtor has prospered, the penalty can be collected for the moratorium period.”

Thus, the main question facing the Economic College of the Supreme Court is whether there are restrictions on the circle of persons subject to the moratorium and whether it is necessary to take into account the financial situation of the defendant and his good faith in order to decide on his release from the penalty. Veronika Chelnokova expects that the Supreme Court will give “a detailed interpretation of the application of Plenum Resolution No. 44 to the 2022 moratorium and formulate specific criteria.” She believes that courts should move away from the formal “moratorium for all” approach and “examine in more detail the circumstances of the debt, if the creditor claims bad faith.”

Considering that “the purpose of introducing a moratorium is to protect business from the 2022 crisis,” Ms. Efimova considers “it is very likely that the Economic College will not automatically extend the moratorium to everyone, but will indicate the need to assess the degree of impact of this crisis.”

Anna Zanina