Today, many foreign companies have suspended or ceased operations in Russia. A draft law has been submitted to the Russian Parliament regulating the scenario of external administration in relation to such companies.

According to Olesya Petrol, a partner of Petrol Chilikov, the reasons for this decision were related not only to the geopolitical situation. For many companies, it was objectively impossible to continue doing business in Russia, for example, due to failures to deliver equipment, components and the like.

“I do not see investors abandoning everything and running away. I see a purely sensible approach: they are trying to find ways to exit responsibly or to continue their activities in Russia,” Petrol says.

A draft law on external administration is now being discussed in the media. If the amendments are passed, then large foreign companies that have left or will leave in the future can be subjected to an expedited external administration by a court. The tasks of such an administration would be to take an inventory of the company’s assets and draw up a register of creditors’ claims, and then to sell the assets at auction and satisfy the claims.

Even before this news, there had been statements from public officials that a complete withdrawal from the Russian Federation would be treated as deliberate bankruptcy (Article 196 of the Criminal Code). “How realistic is such a scenario? It’s hard to say,” Petrol admitted. In her view, this corpus delicti refers to situations where there is a loss, for example, a creditor is left with an unsatisfied claim after the procedure is over. Thus, external administration and Article 196 of the Criminal Code should not be applied either together or in parallel, she believes.

Read the full article here.