When a pledge is foreclosed upon through a sale at auction, the pledgor’s interests are protected: through competition from a wide range of third parties, the sale takes place at a real, rather than fictitious, market price.

If the proceeds of the sale of a pledged item at auction exceed the amount of the claim secured by the pledge, the difference (superfluum – collateral surplus) is returned to the pledgor (Article 334 § 3, Paragraph 2 of the Russian Civil Code). An agreement to waive the pledgor’s right to receive the collateral surplus is null and void.

When a pledge is foreclosed by way of abandonment (so-called lex commissoria) or when the pledgee sells the pledged item directly to a specific third party (without an auction), the pledgor is in a more vulnerable position with regard to the prospects of obtaining the collateral surplus.

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