In April 2022 a Russian court for the first time recognized a foreign company Pandora consulting LC registered on the island of Nevis and engaged in debt collection on the territory of the Russian Federation as bankrupt.
A Russian creditor of the company had filed the relevant application seeking to recover the fees for the bankruptcy trustee services and referring to the decisions of the Russian courts which had come into force.
The sole shareholder and the company's chief executive (a Russian citizen) stated that it was necessary to terminate bankruptcy proceedings because the company had been removed from the foreign commercial register and deregistered from tax registration in Russia at the end of 2021.
It was pointed out that based on a literal reading of the law, a Russian court is not entitled to initiate bankruptcy proceedings against a foreign legal entity. However, the size and nature of Pandora consulting LC's outstanding obligations would allow the institution of insolvency to be applied if the company were Russian, and a refusal to satisfy the applicant's claims in the case at hand would limit the creditor's right to obtain effective judicial protection.
In this connection, the court considered it possible to apply the analogy of law and to introduce insolvency proceedings with regard to the debtor's property located in or closely connected with the Russian Federation. It was also taken into account that under Nevis law, a liquidated company continued to exist for three years from the date of liquidation to assert possible claims and, if such claims were asserted, the period was extended until full discharge of obligations and settlement of disputes.
The appellate and district courts upheld the position of the court of first instance. The Supreme Court of the Russian Federation also found no grounds for reviewing the case.
A Russian creditor of the company had filed the relevant application seeking to recover the fees for the bankruptcy trustee services and referring to the decisions of the Russian courts which had come into force.
The sole shareholder and the company's chief executive (a Russian citizen) stated that it was necessary to terminate bankruptcy proceedings because the company had been removed from the foreign commercial register and deregistered from tax registration in Russia at the end of 2021.
It was pointed out that based on a literal reading of the law, a Russian court is not entitled to initiate bankruptcy proceedings against a foreign legal entity. However, the size and nature of Pandora consulting LC's outstanding obligations would allow the institution of insolvency to be applied if the company were Russian, and a refusal to satisfy the applicant's claims in the case at hand would limit the creditor's right to obtain effective judicial protection.
In this connection, the court considered it possible to apply the analogy of law and to introduce insolvency proceedings with regard to the debtor's property located in or closely connected with the Russian Federation. It was also taken into account that under Nevis law, a liquidated company continued to exist for three years from the date of liquidation to assert possible claims and, if such claims were asserted, the period was extended until full discharge of obligations and settlement of disputes.
The appellate and district courts upheld the position of the court of first instance. The Supreme Court of the Russian Federation also found no grounds for reviewing the case.