The Supreme Court will decide whether the agency can obtain information out of court about the reasons for deregistering the debtor’s car

The Supreme Court of the Russian Federation (SC) returns to the problem of the arbitration manager’s (AM) request for information about the debtor’s property. This time we are talking about vehicles and documents on their alienation. The Ministry of Internal Affairs refuses to provide documents without a separate court decision due to the presence of personal data of third parties in them. The manager believes that he has the right to obtain information out of court to identify the bankrupt’s assets and challenge his transactions. Lawyers and judges explain that this can save time and money on bankruptcy proceedings, as well as reduce the burden on the judges themselves. But the positions of the courts, including the Supreme Court itself, have so far been contradictory.

The Supreme Court will consider the question of whether the AU can obtain information out of court about the reasons for deregistering the debtor’s car. The decision will be made as part of the insolvency case of Andrei Trufanov (declared bankrupt in July 2022). His AU requested information from the Ministry of Internal Affairs about the debtor’s vehicles from January 1, 2019. They reported on a 2013 Chery car registered to Andrei Trufanov and a 1997 Skoda Felicia deregistered in March 2021. The Ministry of Internal Affairs refused to provide copies of documents on the reasons for deregistration because they contained personal data of third parties.

AU contested the refusal. The arbitration courts of the first and appellate instances supported the manager, obliging the Ministry of Internal Affairs to hand over the documents. But the cassation recognized the refusal as legal, considering that the information could be given to the AU only by a court decision. AU appealed to the Supreme Court, believing that he had “the right to receive information to fulfill his duties.”

The Bankruptcy Law obliges the bankruptcy authority to collect information about the debtor’s transactions and actions, as well as take measures to search for and return his property held by third parties. Information about the car alienation transaction is necessary to verify its legality. In this regard, the AU insists that it has the right to obtain information about the debtor, property, counterparties and obligations, including from government authorities, including what constitutes “official, commercial and banking secrets.” Third parties are protected by the AU’s obligation not to disclose confidential data under threat of prosecution, including criminal liability. The Economic Collegium of the Supreme Court will consider the case on November 29.

Arbitration manager Pavel Zamalaev emphasizes the importance of obtaining primary documents: “To decide whether to challenge a transaction, you need to find out at what price and to whom the vehicle was alienated.” The bankrupt is “interested in concealing information” and the Ministry of Internal Affairs remains “the only source of information,” clarifies Pavel Kirsanov, head of the Restructuring and Bankruptcy practice at Regionservice.

But the courts do not have a uniform approach to the problem. Pavel Zamalaev talks about his experience of requesting documents on the alienation of expensive cars by the debtor: the Ministry of Internal Affairs refused, but the cassation supported the AU. In 2020, the Supreme Court also spoke out in favor of the AU on requests for alienation of vehicles by the debtor, clarifies Ruslan Petruchak, adviser to the dispute resolution and bankruptcy practice of BGP Litigation. But, clarifies the head of the Bankruptcy practice of AB KIAP Ilya Dedkovsky, in May 2022 the Supreme Court took a different position in a similar case – then it was about information about the debtor’s spouse. The AU asked the Ministry of Internal Affairs for information about citizenship and passport data to identify property jointly acquired with the debtor. The Supreme Court decided that without a separate permission from the court, the AU does not have the right to obtain information since it contains personal data of a third party.

The current regulations (approved by order of the Ministry of Internal Affairs dated December 21, 2019) do not directly mention the vehicle in the list of those to whom information about the vehicle is issued, but it gives the right to obtain this data to other persons in cases provided for by law, emphasizes Ruslan Petruchak. Pavel Zamalaev believes that such a right of the AU follows “from a literal interpretation of the provisions of the bankruptcy law.” Pavel Kirsanov agrees with him, noting that requesting information through the court “creates additional obstacles to identifying and preserving property.” The load on the courts themselves will also decrease, lawyers add. “If you request information through the court for each case, millions of meetings will be required per year, taking into account dozens of requests from the AU and hundreds of thousands of bankruptcies of citizens alone,” notes Pavel Zamalaev.

Ilya Dedkovsky believes that the Ministry of Internal Affairs requires permission from the subject of personal data or the court, not wanting to face claims from citizens. But the lawyer admits that requesting information and documents through the court “greatly delays the process.” According to Pavel Zamalaev, this prolongs bankruptcy by four to six months. Lawyers do not see any serious risks of abuse on the part of the AC, since its powers and responsibilities are limited by law. Ilya Dedkovsky believes that the AU should be allowed to obtain information about transactions of only the first order without trial.

Anna Zanina