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RKP team has successfully defended the Russian Standard bank in the cassation court and prevented an adverse legal precedent
18 January 2021

RKP team (Dmitry Kletochkin, Partner, and Oleg Permyakov, Head of Restructuring and Insolvency) has successfully defended the Russian Standard bank in the Moscow District Cassation Court. Having considered the cassation appeal of the Bank, the Court cancelled the Appellate Ruling invalidating security transactions in favor of the Bank and removing the Bank from the List of Creditors with the claims exceeding half a billion rubles (RUB 511,991,289.24).

The Moscow Region Arbitrazh Court (the first instance court) has included the Bank’s claims into the List of Creditors on the basis of two surety agreements, concluded between the Bank and the individual (the Debtor) who acted as a guarantor under two loan facility agreements made with a legal entity having the debtor as its beneficiary.  

This Court Decision has been appealed by one of the creditors who objected the Bank’s claims inclusion into the creditors list and filed a claim to declare the surety agreements invalid. As a result of the appeal, the first instance ruling has been cancelled, the surety agreements have been declared invalid and the Bank’s claim seeking to be included to the list of creditors has been rejected.

Adopting the contested Ruling, the Appellate Court indicated that when issuing a loan, as well as making security transactions, the Bank had to check the solvency and reliability of not only the main borrowers, but also the guarantors and pledgers with whom these transactions were made. The Bank, acting reasonably and exercising due diligence, was able to establish the existence of signs of insolvency on the part of the debtor.

The Court of Appeal has also concluded that the Bank abused its right, since it did not take into account that on the date of the contested transactions, a significant part of the debtor`s property was encumbered with pledges, and also placed the risk of unfair behavior of the debtor on the Bank, indicating that the Bank did not take into account that it was provided with a guarantee for the amount a loan with a limit that is many times higher than the debtor`s annual taxable income.

To challenge the adverse court ruling, the Bank has engaged Rustam Kurmaev & Partners (RKP).

This dispute was aggravated by other court decisions adopted in the appellate instance on a parallel dispute involving another large bank with similar circumstances.

During three hearings in the cassation court, the RKP lawyers succeeded in convincing the court of the illegality of the Appellate Court Ruling and the need to uphold the Decision of the first instance court. The Cassation Court has taken into account RKP’s arguments and granted the Bank’s claim for inclusion into the List of Creditors. 

The victory in this dispute is important not only for the client due to the significant amount of the Bank`s claims, but also for the entire lending market. If the Appellate Ruling remained in force and, as a result, the formation of negative judicial practice at the level of the cassation district, the banking community would face the risk of invalidating security transactions when lending to groups of companies and holdings. Thus, it is obvious that the banks would be forced to revise their policies on lending to groups of companies and holdings, as well as issuing guarantees, which have been taking shape for decades and in line with the norms of the Central Bank of the Russian Federation.