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When may a creditor claim money from his debtor's surety? A comment by S&K Vertical's head of projects Alena Bachinskaya for Pravo.ru

13 September 2017

A firm could not repay the loan and "fell down" in bankruptcy. The guarantor for this loan was the company's director, and the bank sued her. However, she said that the bank did it too late, in excess of 1 year period to make such a claim. The parties started a dispute as to the moment triggering the countdown of this period. The dispute ended up in the Supreme Court.

Which moment starts the countdown of the limitation period for the creditor to sue the debtor's guarantor in case of bankruptcy? Should it start from the introduction of the supervision procedure or only after the bankruptcy administration procedure has begun? There is no unequivocal answer to this question in current jurisprudence, says Farrukh Sarimsokov of Liniya Prava Law Firm. He cites as an example the decision the Commercial Court for the Moscow Circuit dated February 6, 2014 in case No. A40-85353/2010 and the ruling of the 12th Appellate Commercial Court dated October 10, 2016 in case No. A57-23400/2015. Commercial Court for the Moscow Circuit decided that the claims for the guarantor can be presented only after the beginning of bankruptcy administration procedure. However the 12th Appellate Court has considered that the suite may already be filed within the supervision stage. Anna Kabanova became a hostage of this exact situation.

A loan without return

In 2013, Almazergienbank issued a multimillion-dollar loan to her firm called PC-Finance for three years (the amount is blacked out in the publicly available documents). Kabanova, the company's director, guaranteed this loan. The parties did not specify the specific term of the guarantee, noting that it was to terminate after full repayment by the debtor.

The company has never been able to return the full amount of the loan, because in 2015 it went into bankruptcy (case No. A56-4226/2015). First, Commercial Court for St. Petersburg and Leningrad Region, by a decision dated April 22, 2015, has started supervision procedure in respect of PC-Finance. On June 15, 2015, the bank submitted an application to the commercial court to include the entire amount of the company's debt be included in the register of creditors' claims, which has been done. And on October 12 of the same year the court declared the firm bankrupt and initiated bankruptcy administration. Then in August 2016 the bank decided to recover the company's debt, i.e. 53 million rubles, from the guarantor in judicial order.

Counting matters

However, the defendant did not agree with this claim, stating that the director's guarantee had already ceased to exist. Kabanova pointed out that the guarantee contract does not specify the period of its validity. Consequently, the defendant's duty would cease to exist if the creditor "fails to sue the guarantor within one year from the maturity date of the obligation" (paragraph 6 of Article 367 of the Civil Code), Kabanova explained. In her view, the one-year period should be counted from the date when the court instituted the supervision procedure in respect of PC-Finance. Therefore it expired in April 2016, concluded the defendant.

However, Yakutsk City Court disagreed with this calculation. Judge Yevgeny Lukin explained that according to the law, the period in question should be counted from the moment when the company was declared bankrupt, i.e. since October 12, 2015 (paragraph 1, Article 126 of the Law on Insolvency (Bankruptcy).) Consequently, the bank's application fell within the envisaged 12 months after that moment (case No. 2-12098 / 2016 ~ M-11546/2016). Appelate court agreed with this conclusion of Yakutsk City Court and sustained its judgment (case No. 33-5908 / 2016).

And where have you been before?

Kabanova did not agree with the judgments of these instances and appealed them in the Supreme Court. At a hearing in the Supreme Court on August 8, 2017, she appeared in person and maintained her position: "The deadline for filidng the bank's claims ended on April 22, 2016". She again stated that the year period should be counted from the moment of the introduction of the supervision procedure in the company.

Ekaterina Mavleeva, representing the bank, was quite brief and asked to refuse Kabanova's complaint. However, it was her to whom the three judges posed most of their questions .

- Why could not you file the claim against the defendant between the introduction of the supervision procedure and the bankruptcy administration stage? - asked Sergey Astashov, presiding judge.

- You see, the bank had an oral agreement with Kabanova that she would facilitate the repayment of this debt. However, she did not manage to do it, so everything ended up in court too late, - explained Mavleeva.

- When was the last time that the firm paid on the loan? – asked judge Sergey Romanovsky.

- In December 2014, - flabbily said the plaintiff's representative.

- So why did not you turn to the guarantor at once, and instead did it only after almost 2 years? - asked Romanovsky.

- We simply assumed that if we claim our money before the bankruptcy of the enterprise, they refuse," Mavleeva replied.

Supreme Court chose the date

After hearing all of the parties' arguments, the "troyka" bench retired to their chambers and after several minutes announced the outcome: to cancel the appeal and return the case for a new consideration back to the Supreme Court of the Republic of Yakutia.

In the reasoning part of the decision, the judges of the Supreme Court pointed out that the company's arrears on monthly payments had appeared since January 2015. And the guarantor's liability vis-a-vis the creditor arises at the time of failure of the borrower to pay even a part of the debt, underlined the Civil Matters Chamber of the Supreme Court (Case No. 74-KG17-12).

Therefore, the limitation period to sue a guarantor needs to be counted since June 15, 2015, the date when the bank submitted an application to the arbitration court requesting that the entire amount of the company's debt be included in the creditors register, decided the Supreme Court. Thus, the bank did not meet the legal deadline, and the lower courts had to reject the lawsuit.

Pravo.ru experts: "Lower instances were right"

However, prior to the beginning of the session in the Supreme Court, our experts had no doubt that the Supreme Court would sustain the decisions of lower instances. According to Alena Bachinskaya of S&K Vertical, the main legal issue in this dispute concerns the interpretation of Part 3 of Art. 63 of the Bankruptcy Law ("Consequences of the commercial court's decision to introduce supervision procedure"). The expert notes that this rule contains a provision according to which the contractual obligations of the debtor are considered to become mature at the moment when the supervision procedure is initiated, even when they had been created before the bankruptcy case. At the same time, this rule is to be applied only for the purpose of participation in the bankruptcy case, noted the lawyer. So this provision does not apply to guarantee contracts, says Bachinskaya.

Roman Krylov of Kovalev, Tugushi & Partners adds that this position is confirmed in paragraph 48 of the resolution of the Plenary Session of the Supreme Commercial Court dated July 12, 2012, No. 42 "On some issues related to resolving disputes concerning guarantees."

Maria Sidorova, head of judicial practice at A2.Attorneys agrees with her colleagues and explains that when a company enters the supervision procedure, it is not yet the fact that it will be declared bankrupt later. In fact, according to the law, such procedures as financial recovery or external management are still envisaged, the lawyer reminds: "Following them the debtor may regain its solvency and go out of bankruptcy." While the company is under supervision, it does not lose any of its legal capacity: it can conclude deals, and the CEO and employees of the company continue to fulfill their duties, Sidorova emphasizes.

Mergen Doraev, partner at EMPP, notes that the main way to protect the guarantor in such a dispute is still to prove bad faith of the creditor within the bankruptcy of the debtor. In addition, the expert warns that a decision in favor of the defendant in this dispute will give creditors the opportunity to bring suits against the guarantors immediately after the introduction of supervision with respect to the debtor: "Nobody will wait until the company is declared bankrupt."

By: Alexey Malakhovsky

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