Challenging transactions in bankruptcy

Photo from Bankrotstvoved website

The term “bankruptcy” is familiar to many. Only some people encounter it while playing Monopoly with their children, and others when concluding multimillion-dollar deals. The essence of the procedure, however, is the same: one of the parties ceases to cope with its financial responsibilities and is recognized as a debtor, forced to admit bankruptcy and enter into dialogue with its creditors through the court.

In our articles we have already touched on the topic of financial insolvency. In them you can read and find out more about what it is. And today we’ll talk about challenging transactions in bankruptcy, we will tell you how to write a corresponding application to the court if, after all, the transaction was concluded and the opponent has ceased to cope with financial responsibility, and we will also indicate the deadlines for appealing and challenging such transactions.

The essence of challenging a transaction in bankruptcy

Challenging transactions is a common procedure in modern society. The essence of which is that creditors want to satisfy as many of their claims as possible and get as much money as possible, and the debtor, naturally, on the contrary, tries to preserve as many of his assets as possible.

Photo from NewsCross website

Unfortunately, the institution of modern lending in our country is quite young and this process is not 100% regulated and therefore the true motives of the applicants and the true position of the debtors are not always clear. After all, it often happens that a wealthy debtor easily avoids payment, or the creditors themselves illegally try to enrich themselves at the expense of their opponent.

In 2015, amendments were made to the Bankruptcy Law. And since then, a bankrupt is not only a credit organization, but also an individual. a person, a simple person, who is not even an individual entrepreneur (IP).

In order for the court to take up the case of declaring an ordinary person bankrupt: his debt must be over half a million rubles, and he himself must not take more than three months to repay it. However, official recognition of bankruptcy can only be obtained through the court.

There is a concept of fictitious bankruptcy. This is a situation when a citizen declares his insolvency without being one. Of interest is the fact that the fine for such a violation varies from 1 to 3 thousand rubles. The same amount is assigned for deliberate bankruptcy.

But concealing property is already a criminal matter. For varying degrees of severity in cases of this kind, you can say goodbye to freedom for a maximum period of 6 years.

Photo from exzk.ru

Which transactions are called voidable and which are void?

A transaction that initially did not meet the requirements of the law is called voidable. You can learn more about this by studying the Civil Code of the Russian Federation, namely Art. 166.

Photo from advokat-yankin.ru

with a legal entity whose powers do not allow this;
with physical or a legal entity with limited powers;
with a person over 14 but under 18 years of age;
with a person who cannot understand and bear responsibility for his actions;
as a result of some external influences, which include pressure, threats or deliberate deception.

Sometimes difficult life circumstances can cause a transaction to be declared invalid.

Voidable transactions can only be declared invalid through a court.

To understand the differences, we will indicate the main factors of a void transaction. Such transactions were already concluded in violation of the law and are initially considered invalid, rather than recognized as such in court.

Photo from the site ack1.ru

Its distinctive features:

does not comply with the legislation in force at the time of conclusion of the contract;
contrary to morality and morality;
one of the parties to the transaction is a person under 14 years of age;
was concluded with a completely incapacitated person;
was made to cover up another transaction.

Who can challenge a transaction in bankruptcy?

In our country, in order to challenge a transaction and declare it invalid, you must file an application in court. And for this there is a special position and only a person who is an arbitration manager can do this.

He submits the application at the place of residence of the applicant or at the location of the debtor.

There is one more important feature. Before the arbitration manager submits the application to the court, a general meeting of creditors must take place. Where a general decision will be made on the need to challenge the debtor’s transactions.

Photo from the site moskva.arbitrazhnyj-upravljajushhij.ru/

In addition to the application, the applicant will have to attach the following documents:

decision of the meeting of creditors;
documents that will confirm the signs of invalidity of the transaction (in accordance with the provisions of the Civil Code of the Russian Federation);
documents that confirm the existence of a transaction (these may be purchase and sale or supply agreements, receipts for payment for goods or services, supplies).

How to write an application for invalidation of a transaction in bankruptcy

Before writing your own statement, you can familiarize yourself with the existing special form for statements of this nature. You can find them on the Internet or ask the arbitration manager.

To put it simply, in your application you must reflect all the facts (documented) about the violation of the transaction, whether it is a deliberately fraudulent financial transaction (on the part of your opponent) or failure to meet delivery deadlines, payments, etc.

Photo from Look.com.ua

Initially, the statement indicates which parties (you and your opponent), where and the subject of what the deal was concluded and why you consider it controversial. Each fact should be supported by documentary evidence (checks, decision of a meeting of creditors, etc.).

Do not forget that a copy of the application must be sent to all creditors who are involved in the process.

Time limits for appealing transactions in bankruptcy

Within a year from the date of conclusion of the contract, you can file an application to challenge the transaction.

There is such a thing as a suspicious transaction. This is a situation where one of the parties knew about their financial instability, but deliberately entered into transactions. In this case, there are several deadlines for challenging.

Photo from the site ipopen.ru

1 month. Before or after accepting a bankruptcy petition. In the event that there are several creditors, but it can be proven that the requirements of only one of them are met.=
1 year. Before or after the bankruptcy petition is accepted. If the obligations of the parties are unequal.
3 years. Before or after the bankruptcy petition is accepted. And in the event that it is proven that the debtor entered into a transaction in order to cause property damage to the creditor.

Reasons why a bankruptcy case may be dismissed

There are cases in which a bankruptcy case may be dismissed or suspended for some time. Such grounds include:

restoration of the debtor's financial activity;
conclusion of a peace agreement, according to which the parties found a compromise;
recognition of the plaintiff's claims as unfounded, given that this was the only applicant;
the plaintiff's refusal of his claims;
satisfaction of creditors' claims due to bankruptcy proceedings.

Photo from The Insider website

It is interesting to note that legal costs for cases of this type include:

payment of state duty,
media expenses (publication of information),
expenses for payments for arbitration officials and those persons whom they attract to perform activities related to the case (independent appraisers, etc. may be included here).

The debtor must reimburse these expenses out of turn.

If he does not have enough funds to pay in full, the applicant will pay the rest.

A number of features of challenging transactions in bankruptcy

Photo from Znak.com

The procedure when a credit organization declares itself insolvent is called public, since such organizations can have from several hundred to several thousand creditors.
During the consideration of the case in court, transactions of both the citizen declared bankrupt and his spouse can be challenged if the transactions involved joint property. For example, the debtor transfers the house to his wife’s name, and she carries out transactions to sell it. And at the time of the meeting, the debtor allegedly has neither housing nor finances.
If the transactions affected the rights of persons under 18 years of age or incompetent citizens of any age, guardianship authorities must be present at the meeting.
The absence of the debtor at the court hearing does not prevent the recognition of transactions as invalid. And maybe it even gives a greater reason for such a reason.

Photo from the site istoki.tv

As one can conclude, judicial practice in cases of this kind is quite extensive. In essence, no one wants to incur extra expenses and everyone wants to make additional profit. Therefore, in order to avoid getting into such situations, you need to approach any kind of transactions very carefully, and if you find yourself in a similar situation, without panic, look for solutions. After all, bankruptcy can be challenged, the transaction can be declared invalid and your good name, and most importantly, financial losses can be restored.