Collection and bankruptcy / protection of interests of debtors

Debt collection must be divided into several stages according to law, but in Russian practice they are usually connected by a common line. Here are the reasons.

The first stage usually is bringing an action and litigation. The parties can rarely reach an agreement through negotiations and give it the proper legal form – but that’s the remedy it would be always useful to start with – and if you didn’t succeed in that matter, we would be ready to offer you our services. Yet is not popular in Russia the procedures of reconciliation, including mediation, which are widespread in Europe or in the US. You can ask us why? The reason is that there is a great quantity of lawsuits, in which there is no real legal dispute, but simply the unwillingness of the debtor to pay. Sometimes the reason of such behavior of the debtor is financial difficulties or real insolvency, but more often – just lack of Good Faith.

The second stage is an enforcement of a court decision – executive procedure by special law enforcement officers – bailiffs, who acts like court officers, bailiffs or « commissaires (huissier) de justice » in some other countries.  Unfortunately, these are situations when the debtor understands that he acts unlawfully, but hopes to avoid payment, seizure of his property and execution of a court decision through various machinations. In some countries, such as Kazakhstan or the UK, the state has no monopoly on the enforcement of court decisions. In Russia only bailiffs – officers of a special governmental agency under the Ministry of Justice (FSSP, Federal Bailiff Service – ФССП, Федеральная служба судебных приставов) have the authority to enforce court decisions. Unfortunately, they do not always do their best to protect the rights of private persons without control on their side. And in this case, we are ready to provide you with reliable legal support.

The third stage takes place when the enforcement proceedings held by bailiffs didn’t bring a result.  Either the debtor really doesn`t have any properties, he is insolvent (in the situation when there is just lack of property to recover all debts the creditors rarely file for insolvency of their debtor), or the seizure and selling of his property faces some difficulties, that cannot be overcome by bailiff. In such cases a trustee in bankruptcy can often take actions that a bailiff would not be able to take. For example, in some cases he can claim for personal responsibility of individuals who control an enterprise or obtain benefits from the insolvency, or he can claim the invalidity of some transactions. Or a trustee in bankruptcy can sometimes help to register a proper title to the estate in order to distribute property among creditors. It should be noted that despite available opportunities the bankruptcy relates to risks for the creditors. In common the result of bankruptcy is discharging and ceasing to be liable for the debts. Thus, it is necessary to weigh the pros and cons before presenting a bankruptcy petition to the court.