How Russia could use bankruptcy law to punish foreign companies
The Hindu
Creditors, including the Russian government, can force a company into involuntary bankruptcy and oust its management.
As foreign companies seek to exit Russia over the war in Ukraine, they face the prospect that Russian bankruptcy law could be used to seize assets and even lead to criminal penalties.
How Russia’s bankruptcy law differs from bankruptcy law in the U.S.
In the United States, bankruptcy laws are meant to give indebted companies a fresh start.
Distressed companies in the United States usually enter bankruptcy willingly and the law lets them retain existing management and control over assets.
Russia's law, however, generally prioritises the needs of creditors who are owed money. This means creditors, including the Russian government, can force a company into involuntary bankruptcy and oust its management.
Some legal experts said foreign companies fear Russian creditors could abuse that process to install leaders willing to sell their assets to business rivals or companies aligned with the Russian government.