Analytics Publications Banking

20
April
2018

The practice of challenging of transactions in case of the bankruptcy of credit institutions

According to the statistics posted by the Bank of Russia on its website, as of 1 January 2017, 288 credit institutions (87.54% of the total number of liquidated credit institutions) have been declared bankrupt by arbitration courts, bankruptcy proceedings have been initiated in relation to them and bankruptcy receivers have been appointed. However, the statistics of satisfying the creditors’ claims is low – since credit institutions do not have sufficient funds for a long period of time, the claims are satisfied at the average of 15.8% of the amounts of ascertained claims.
Victor Petrov, Partner, Head of Litigation practice
Legal work in a credit organization
13
April
2018

Securing of loan obligations to the bank: analysis of the most commonly used schemes

When entering into a loan agreement between credit institution and borrower (in this article, the primary focus will be on the legal entities acting as borrowers), the majority of financial risks lies specifically with the creditor that provides monetary resources to the borrower. For this reason, the means of securing the obligations become particularly important for the entity that has provided a loan. As a rule, the particular type of security is suggested by the credit institution itself, based on the amount of the provided loan, status of the borrower (its financial standing, corporate structure and assets) and other concurrent factors.
Victor Petrov, Partner, Head of Litigation practice
Business and Life
28
November
2017

Information on beneficial owners: disclose it and do not make any errors

In August 2017, the Russian government published the rules on how legal entities need to present information about their beneficial owners to government agencies. The new rules will permit checking how companies identify, update, and store information on the people that control their actions. To ensure that relevant responsibilities are adequately fulfilled, it is necessary to gain a detailed understanding of these new provisions, since in practice they might not be interpreted in a clear-cut manner.
Ilya Shengeliya, Compliance Counsel
Securities Market
12
April
2017

How to recover overdue debt with a public notary’s writ of execution

Thanks to changes in Russian Federation Framework Legislation governing public notaries, lending organizations can now immediately, without litigation, apply for bailiff services using a notarized writ of execution. What is it necessary to do in order to obtain the opportunity to use this instrument? Is it possible to use this notarized writ of execution to recover penalties? What is the procedure for presenting claims to one of the parties in a legal relationship involving lending if the writ of execution has already been served?
Bank lending
8
February
2017

The limits of what is permissible. What to do if the bank wants its loan back

The worse the borrower’s financial performance is, the higher the risk of loan defaults.  Banks are forced to impose tougher requirements for borrowers, and offer more ‘stringent’ conditions for loan agreements. However, banks do not always tighten their requirements on the basis of what is economically advisable. Situations have become known where the loan agreements include provisions that – although they are not at odds with the rules of Russian civil law – in practice put the lenders (in this case the banks) in a more advantageous situation, and give them the opportunity to abuse their rights. Companies should remember that a bank that asks for a loan back must have weighty reasons for doing so. Those will be discussed.
Сorporate lawyer
26
September
2016

Loan or lease?

The need to purchase hardware or specialized equipment often puts business before a choice – take out a loan or lease what is required.
National Business
10
June
2016

New rules for the activities of foreign-controlled companies

The goal of de-offshorization is to limit the ability of aggressive tax planning using a foreign element, and for taxing the retained earnings of foreign companies controlled by Russian tax residents. These new changes have affected not only taxpayers using foreign companies for tax planning purposes, but also the work of foreign companies that receive income from Russia.
Сorporate lawyer
15
April
2016

Protecting the rights of owners of registered book-entry registered securities by filing a claim vindication

Book-entry registered securities and stocks are of particular value for their owners by virtue of their representing large amounts of property, intellectual and corporate rights. For this reason, shares are often the subject to civil law transactions, which subsequently may end up being challenged by one of the parties, for whatever reasons. The problem of protection of the rights of owners of book entry registered securities is now extremely urgent, due to the development of civil law turnover and a significant volume of transactions involving shares.
Victor Petrov, Partner, Head of Litigation practice
Securities Market
15
January
2016

How to check one’s counterparty

Checking out counterparties has traditionally been an essential pre-contractual stage of the work of almost any company (with rare exceptions). In large organizations, as a rule, there are specially designed internal regulations by which employees must be guided in the selection of potential contractors and the establishment of contractual relations with them. These regulations provide a list of documents that must be demanded from a potential contractor for their subsequent sending to the legal department of the organization. For its part, the legal department, after a careful analysis of such documents, draws up a report on the presence or absence of legal risks in concluding a contract with the given contractor.
Bank Review
24
November
2015

Bank increased interest on the loan, citing the economic crisis. The chances of a borrower challenging such an increase

- In which cases can a bank increase the interest rate on a loan - What arguments will help a borrower challenge an interest rate increase on a loan - How to prove the punitive nature of the new interest rate imposed by a bank
Victor Petrov, Partner, Head of Litigation practice
Arbitration practice
20
April
2018

Recommendations for conclusion of shareholders’ agreements with regard to banks

In our practice, over the last 3 to 5 years, the shareholders and participants of the Russian companies have been increasingly concluding the shareholders’ agreements (corporate agreements) under the Russian law. This trend also concerns the banks. For example, according to the publicly available sources, the shareholders’ agreements have been concluded in respect of PJSC “Post Bank”, OJSC “TransCreditBank” and PJSC “MTS Bank”.
Legal work in a credit organization
22
March
2018

New round of anti-money laundering in EU and its consequences

Although the new European AML regulation does not directly apply to Russia, it will anyway affect the Russian banks. How do requirements of Regulation (EU) 2015/847 align with Russian legislation concerning personal data? What duties are imposed on the payment system operators? What are the motives for the European courts to solve the dilemma as to which matter has higher priority: the need to disclose information for AML/CFT purposes or the need to observe confidentiality?
International Banking Operations
29
September
2017

Currency clauses: the consequences and risks

A currency clause decreases losses incurred by fluctuations in the exchange rate for an unstable currency. However, judicial practice when resolving disputes that involve this mechanism is not marked by uniformity. That is why, if the relationship has been poorly structured, having these conditions in a contract can cause unfavorable consequences for every participant in the transaction.
Ilya Shengeliya, Compliance Counsel
EZH-Yurist
23
March
2017

Loan agreement currency risks

Among the cases covered in the Russian Supreme Court's Case Law Review (published on 16 February 2017), special mention should be made of a dispute relating to a foreign-currency denominated loan agreement. The claimant was attempting to change a loan agreement with a bank on the basis of Section 451 of the Russian Civil Code, on account of a material change in circumstances. The claimant argued that the significant increase in the exchange rate of the foreign currency since the signature of the agreement constituted such circumstances. The lower courts agreed and ruled in the claimant's favour, but the Supreme Court's Judicial Chamber on Civil Cases disagreed and sent the case back to the court of first instance. Who, then, should bear the risks associated with a foreign-currency denominated loan agreement?
Victor Petrov, Partner, Head of Litigation practice
EZH-Yurist
14
December
2016

Recovery of damages from the issuer and registrar for improper cancellation of shares

The “heyday” of corporate conflicts, related to theft and other cases of improper cancellation of shares, took place in the 2000s. Back then was formed the main layer of legal approaches of the courts to such disputes, and the nuances of protecting the victim shareholders. If unable to get back their shares from the issuer, the affected shareholders, in general, resorted to the universal path of defending their legitimate interests – seeking damages to be reimbursed by the company and/or the registrar. Today, cases involving the recovery of such losses have become much fewer. However, in practice, during consideration of similar disputes arising today, the courts still can view such issues differently. Always remain relevant the questions of correctly determining the amount of compensation that should or may be recovered through the court for unreasonable transactions with shares in the shareholders register.
Maxim Grigoryev, Partner, Head of Southern directorate, Head of special projects
Joint Stock Company
26
August
2016

Interest rate on a loan – when does a bank have the right to raise it unilaterally

Due to the rapid development of the financial markets, the question of borrowed funds (in particular, loans from banks and non-bank organizations) and the legal regulation of such crediting is very acute for individuals and legal entities. The banks retain wide rights to enter into contracts and, on the contrary, the options of the borrower are limited. To learn when a bank is entitled to unilaterally increase the interest rate on a loan, please read this article.
Victor Petrov, Partner, Head of Litigation practice
Business and Life
21
April
2016

Social aspects of bankruptcy

In 2015, legislation in the field of insolvency has taken a step towards the solution of pressing social problems. The main, and most talked-about, event in 2015 was the introduction of the institution of personal bankruptcy. However, against the background of the general excitement around personal bankruptcy, few people noticed the granting to workers of the right to apply for the bankruptcy of their employer. However, as it turned out, the expected social significant effect of these pronouncements did not materialize.
National Business
24
March
2016

Currency violations: a new procedure for calculating fines

On 26 February 2016, a new version of Chapter 5, Article 15.25 of the Administrative Offences Code of the Russian Federation came into effect, which changes the obligations of participants of foreign economic activities for violation of terms of returning to the Russian Federation of advances, not used by foreign contractors. The authors of the law say that these changes are meant to ease the administrative burden, in order to support imports. However, in practice, its implementation can lead to a number of problems.
Ilya Shengeliya, Compliance Counsel
EZH-Yurist
18
December
2015

To get one’s debt returned, or obtain control of the debtor?

The desire to recover a debt from a borrower is understandable. However, is it justified for a bank to resort to abusive and aggressive behaviour? Judicial practice shows that this should be avoided, because it may result in losses to the bank. What are the responsibilities stipulated by legislation when it comes to unscrupulous actions of the lender, upon initiation of bankruptcy proceedings?
Legal work in a credit organization
21
October
2015

What to do if a bank has restricted cash withdrawals

Whereas limiting the amount cash withdrawals by a credit organization is not necessarily a situation that entails the violation of the rights of the client, it nevertheless serves as an indicator of negative economic changes that have occurred in the financial position of that bank.
Victor Petrov, Partner, Head of Litigation practice
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