Dwindles: contesting dilution of the pledge subject in bankruptcy proceedings. Case study, case №А40-6982014

23 july 2018 2018-07-23

Key matter in dispute: Can one contest dilution of the pledged shares under bankruptcy rules, or shall corporate law apply with its three-months statute of limitation period?


RegionGazifikatsiya UK got a loan of RUR 183 million from RosGazifikatsiya, and in return pledged its only valuable asset – 63.1% shares in Teplotsentral Belokourikha. In the end of 2014, when monitoring procedure was introduced with regard to the borrower, acting as a major shareholder it passed a decision on additional issue of shares. By private subscription the shares went to Finesse Services Corporation and the pledged stake was diluted to 2.6%.


Decision of the general meeting on additional issue of shares shall be held invalid under bankruptcy norms since it camouflaged s straightforward sale to an offshore company for RUR 300.000 instead of the market value of RUR 39 million. 63.1% shares in teplotsentral shall return to RosGazifikatsiya as a pledge. Such claims were raised in 2016 by the bankruptcy supervisor – Vladimir Shirokov and RosGazifikatsiya as part of RegionGazifikatsiya UK bankruptcy proceedings.


Decisions made by general meetings shall be contested under corporate norms rather than bankruptcy rules. Besides that, specific three-months statute of limitation period shall apply. And the claimants missed it.


The courts upheld respondents' position. Claims of the bankruptcy supervisor shall be considered in separate proceedings under corporate law norms. Additional issue was not conducted by the debtor and not at its expense, which does not allow contesting it as part of bankruptcy.


Decision of the general meeting of another entity (not being the debtor) and additional issue may not be contested in bankruptcy proceedings, as a general rule. But in exceptional circumstances it is indeed possible – where corporate procedures are applied solely to cause damage to creditors. In the given case, the debtor being majority shareholder actually managed the company and passed the decision on additional issue. Whether he abused the right is to be decided in course of the new round of hearings.


In this case bankruptcy relations clashed with corporate ones. In the essence, the debtor, right before going insolvent, transferred his majority stake in a subsidiary to another person without getting anything in return. Formally this was a decision on additional issue made by the subsidiary’s shareholder meeting. Of course, such an alienation of the major valuable asset, and a pledged one, affected creditors’ interests. Despite the likeness of legal regimes for contesting transactions and decisions of general meetings, Supreme Court still did make an important reservation on the exceptional character of the situation in which case corporate decisions may be contested as a transaction under bankruptcy grounds.

Пресненская набережная, 6 строение 2 123112 Москва
All analytics

Нажимая "Хорошо", вы соглашаетесь с использованием нами инструментов аналитики и организации поддержки.