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Covid-19 coronavirus: Insolvency Moratorium is extended until January 2021

Third follow-up on our alert of 10 April 2020.

On 6 April 2020, the Russian Government introduced a six-month (until 6 October 2020) moratorium preventing creditors from initiating bankruptcy proceedings (the Insolvency Moratorium) in respect of companies operating in the industries that have suffered most from the Covid-19 pandemic, as well as systemically important and strategic enterprises.[1]

The Insolvency Moratorium, which was imposed by the Russian Government primarily to protect the business sector during the pandemic, among other things prohibited (in relation to the companies falling under its regime) payment of dividends, buy back or purchase of any issued shares, set-off of any similar mutual counterclaims, charging penalties on the companies' monetary obligations and enforcement of pledges over the companies' assets. Subsequently, any person falling under the Insolvency Moratorium regime was allowed to opt out of its application by publishing a refusal statement in the Unified Federal Register of Bankruptcy Data.[2]

On 1 October 2020, the Russian Government decided to extend the term of the Insolvency Moratorium by 3 additional months (from 7 October 2020 until 7 January 2021).[3] The companies and individual entrepreneurs operating in the industries that have suffered most from the Covid-19 pandemic and included into the relevant register are entitled to benefit from the regime of the extended Insolvency Moratorium. Our understanding is that the systemically important and strategic enterprises previously falling under the Insolvency Moratorium regime no longer fall under this regulation.

This additional extension is designed to allow the companies which have suffered most in the pandemic to keep their business operating without losing their property or going into bankruptcy. We would welcome opportunities to discuss the consequences of the Insolvency Moratorium with our clients in more detail. Please do not hesitate to contact us.

[1] See the Resolution of the Russian Government No. 428 dated 3 April 2020 "On Introduction of Moratorium on Initiation of Insolvency Proceedings upon Application of Creditors with regard to Certain Debtors"
[2] For further details see our Alerts "Insolvency Moratorium in Russia" of 10 and 24 April 2020.
[3] See the Resolution of the Russian Government No. 1587 dated 1 October "On extension of moratorium on initiation of insolvency proceedings upon application of creditors with regard to certain debtors".

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