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The honesty criterion in contestation of the debtor’s deals in bankruptcy cases

The honesty criterion in contestation of the debtor’s deals in bankruptcy cases

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The honesty criterion is one of the key ones in the course of contestation of the debtor’s deals in insolvency (bankruptcy) cases. Several problems concerning said criterion may be discovered in the legal regulation and in the practice of contesting the debtors’ deals.

Pursuant to Article 61.9 of the Federal Law No. 127-FZ “On insolvency (bankruptcy)” dated October 26 of 2002 (hereinafter – Bankruptcy Law), the claim of contestation of the debtor’s deal may be filed with the court of arbitration by a trustee or the trustee in bankruptcy on behalf of the debtor, on their own initiative or upon a decision of the creditors;’ meeting or the creditors’ committee. The earlier edition of clause 31 of the Resolution No. 63 “On certain matters concerning the application of Chapter III.1 of the Federal Law “On insolvency (bankruptcy)”” dated December 23 of 2010 by the Plenum of the HCA of Russia (hereinafter – Resolution No. 63) contained a mention of a possibility of an exception from the rule set by the Law No. 127-FZ, even though the latter was worded as an imperative rather than general one.

The exception was connected to the situation of the creditor’s resorting to courts with a claim to dismiss the trustee in bankruptcy due to the fact that the latter has executed a deal on the debtor’s behalf with breaches of the Law No. 127-FZ. If the court refused to dismiss the trustee, the creditor, who had requested the dismissal, was able to file the claim to contest the deal for that reason.

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