The Supreme Court will decide whether the company could have rewarded an employee with an apartment shortly before bankruptcy

The Supreme Court of the Russian Federation (SC) will decide whether the company, shortly before bankruptcy, could reward an employee with an apartment. The lower authorities considered that this was an unequal transaction that violated the rights of creditors and canceled it. By that time, the apartment had already been sold, so the market value of the property was collected from the employee. Now the Supreme Court Economic Board will consider the case. It is necessary to find out whether this method of bonus payment was usual for the company, whether it was commensurate with the employee’s labor contribution, and whether the transfer of an apartment was used as a mechanism for withdrawing assets on the eve of bankruptcy, lawyers say.

The Supreme Court will consider a dispute over whether an organization in a pre-bankruptcy state has the right to transfer an apartment to an employee as a reward for work activity. In July 2014, OJSC SGK-TransstroyYamal entered into an exchange agreement with Ilsa Matviychuk (now Novikova) and her two daughters, according to which, in exchange for their apartment with an area of ​​69.7 square meters. m in the city of Labytnangi (Yamalo-Nenets Autonomous Okrug) transferred housing in the same place, but with a larger area – 108.7 sq. m. m. According to the terms of the deal, each premises was valued at 8.6 million rubles, the exchange took place without additional payments. And already in September 2014, the Moscow Arbitration Court opened an insolvency case against SGK-TransstroyYamal, and it was declared bankrupt in September 2021.

As part of the process in May 2022, the bankruptcy trustee of the debtor demanded that the exchange agreement be declared invalid, stating that the transaction was unequal. According to appraisers’ reports, the apartment provided to the defendants was three times more expensive (6 million versus 1.7 million rubles), and the exchange took place just a month and a half before the start of the bankruptcy procedure.

Arbitration courts of three instances upheld the claim, noting that “the actions of a person purchasing property at a price clearly lower than the cadastral and market price cannot be called prudent and careful.” Since by this time the citizens had already sold the apartment to a third party, a reverse exchange of housing was impossible, so they were obliged to pay the cost of the received property to the bankruptcy estate (6 million rubles, 2 million rubles from each defendant). In return, they became creditors in the register of a bankrupt company with a claim amount of 1.7 million rubles. (market value of the smaller apartment).

The defendants filed a complaint with the Supreme Court. They insisted that the exchange for a more spacious apartment actually constituted a material incentive for the employee – Ilsa Matviychuk had worked at SGK-TransstroyYamal since 2006 and the possibility of such bonuses was provided for in her employment contract.

“The provision of free housing for residence or ownership of employees” for their conscientious work was practiced by the organization, therefore recognizing the transaction as unequal “only based on the market value of the apartments is incorrect,” the complaint says. In addition, none of the defendants was affiliated with the company, and the value of the transferred property was less than 1% of the book value of its assets, which suggests that the transaction was made “as part of the ordinary course of business” of the organization.

These arguments interested the Supreme Court, and the case was transferred to the economic board. The meeting is scheduled for May 2.

Veronika Chelnokova, head of the judicial and arbitration practice of Asto Consulting, believes that the position of the Supreme Court will “introduce innovations in the development of judicial practice” in disputes regarding bonus payments to bankrupt employees.

Rewarding employees with apartments “is not universal,” but “one cannot say that this is an exceptional phenomenon; housing is often provided to employees for their length of service,” says Kirill Chukhaldin, project manager at YurTechConsult. This approach is common, for example, in the construction industry, where “developers can transfer apartments to middle managers” as a “form of payment for labor,” says arbitration manager Anna Ivshina.

Thus, “the simple fact of unequal provision is not enough to invalidate the debtor’s transaction, especially in disputes involving citizens,” emphasizes Ivan Stasiuk, advisor to the RKT consulting group.

Veronika Chelnokova, in turn, notes that “an ordinary employee is not obliged to take into account the property status of his employer; the employee’s conscientiousness should be presumed.” At the same time, the courts need to find out “what position the employee held in the company, whether she could have known about the approaching bankruptcy and, accordingly, participated in the scheme to withdraw the debtor’s assets,” adds Ms. Chelnokova.

In this case, the lower courts “in principle avoided assessing the defendant’s arguments that the difference in the cost of the exchanged apartments constituted a bonus for the employee,” explains Kirill Chukhaldin.

At the same time, such an incentive can be declared invalid “only if there is a significant discrepancy between the size of the bonus and the employee’s labor contribution,” the lawyer clarifies. In addition, Anna Ivshina adds, it is necessary to find out “whether the practice of providing real estate to employees was really widespread in this particular company and was common for it.”

Ivan Stasiuk believes that the Supreme Court will ask the courts to “evaluate the nuances of the transaction and find out whether the employee had the intent to cause harm to the employer’s creditor, but, most likely, it will be very difficult to prove this.” Since the exchange of apartments took place shortly before the initiation of bankruptcy proceedings and this type of material incentive is not widespread, this “in itself can already be considered as one of the prerequisites for challenging the transaction,” Mr. Stasiuk believes.

Anna Ivshina agrees that “significant material incentives for an employee on the eve of the employer’s bankruptcy look suspicious,” but considers it “unlikely that the exchange of an apartment in this case affected the possibility of repaying the claims of the debtor’s creditors.”

Anna Zanina, Jan Nazarenko