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Bankruptcy. Disposal of assets

Bankruptcy. Disposal of assets

When entering into bankruptcy proceedings or shortly before debtors, they often try to hide their own assets, transferring them on the basis of a reimbursable or gratuitous transaction. However, the financial manager may consider such a transaction suspicious and challenge it in court..

Challenging suspicious transactions is an extremely common practice: according to the Judicial Department of the Supreme Court, in 2020 y. courts have considered more 36 000 of these applications, and almost half of them were granted..

The criteria for invalidating a suspicious transaction are specified in Art.. 61.2 Federal Law No. 127-FZ "On Insolvency" (Bankruptcy)

  • Causing harm to the property rights of creditors as a result of the transaction
  • Whether the debtor has the purpose of causing harm
  • Knowledge of the other party to the transaction of its illegality at the time of conclusion of the contract.

More often, debtors resort to the transfer of assets free of charge, however, some conclude, that reimbursable transactions are a more reliable way to hide property. However,, arbitration courts still recognize such transactions as invalid.

If the financial manager intends to challenge a truly dubious transaction, the debtor should make every possible effort, to return the property to the estate. Judicial practice is based on the fact that, that such conduct does not violate the debtor's good faith clause. Otherwise, the debtor's conduct may be defined as dishonest, Otherwise, the debtor's conduct may be defined as dishonest..

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