In brief
- A foreign asset may form part of a Russian bankruptcy estate, but a Russian court order does not replace the rules of the country where the asset is located or registered.
- The first steps are to verify the owner, the type of asset, the relevant register and any encumbrances. The insolvency practitioner’s ability to obtain information and act in that jurisdiction must then be assessed.
- For an individual’s property outside Russia, the Russian court issues a separate order. It is enforced under the procedural law of the state where the property is located or under an applicable international treaty.
- Tracing an asset, recognising authority, obtaining interim relief and selling the asset are separate stages. None can be guaranteed without reviewing the particular jurisdiction and documents.
A foreign apartment, bank account, company interest or vehicle registered abroad does not disappear from the legal picture of a Russian bankruptcy. Yet several distinct tasks stand between locating the property and bringing proceeds into the bankruptcy estate: proving ownership, obtaining lawful access to information, establishing the acting person’s authority, preserving the asset where necessary and complying with the local procedure for its sale.
Which foreign assets are examined
Does foreign property enter the bankruptcy estate?
In an individual bankruptcy, the estate includes property owned on the date the person is declared bankrupt as well as property located or acquired afterwards. Property exempt from enforcement and other assets excluded by law do not enter the estate. Article 213.25 of Federal Law No. 127-FZ applies when the estate is formed in the Russian proceeding, regardless of the country in which an asset is found.
Inclusion in the Russian estate does not by itself change an entry in a foreign register, override bank secrecy or establish the practitioner’s authority to sign a sale agreement abroad. Any practical action requires an examination of the law of the country where the asset is located, registered or recorded.
Key limitation: the composition of the Russian bankruptcy estate and the foreign mechanism for obtaining control over an asset are separate legal questions. Freezing or selling an asset cannot be promised merely because it appears in the Russian case.
How work with a foreign asset is organised
1
Identify the asset
Record the jurisdiction, type of property, possible owner, relevant register or record-keeping institution and documents showing how the asset was acquired.
2
Establish ownership
Distinguish the debtor’s property from that of a spouse, company, trust, nominee or other person. An assumption of control is not a substitute for proof of title.
3
Determine authority
Check whether the jurisdiction recognises the Russian proceeding or the practitioner’s status and whether a separate court order, local representative, translation or certification is required.
4
Assess protective measures
If disposal or loss of value is a risk, examine the available local interim measures, evidential requirements, jurisdiction of the court and any counter-security requirement.
5
Agree the sale model
Determine the seller, transaction or auction form, valuation, secured creditor rights, registration of title transfer, taxes, payment currency and route by which proceeds enter the estate.
What a Russian insolvency practitioner may do
Article 20.3 of Federal Law No. 127-FZ entitles an insolvency practitioner to request necessary information and requires measures to protect the debtor’s property. In Russia, public authorities, municipalities, individuals and legal entities provide requested information in the manner prescribed by law.
A foreign bank, register or custodian is governed by the law of its own country. A Russian request does not always create a direct duty to disclose. Depending on the jurisdiction, recognition of the proceeding or the practitioner’s authority, judicial assistance, a separate application or action by local counsel may be required.
Why a separate order is required for foreign property
Article 213.26(1) of Federal Law No. 127-FZ expressly provides that a separate order is made in respect of an individual’s property located outside Russia. That order is enforced under the procedural law of the state in which the property is located or under an applicable international treaty between Russia and that state.
This does not mean that a foreign authority must automatically reproduce the Russian consequences. The practical task is to identify the competent foreign court or authority, the admissible route, the required documents and the relief that may be available.
How to choose the next step
The asset is verified, but the legal route differs
Authority is recognised under the local regime
Prepare evidence of the proceeding and appointment, identify available assistance and then address preservation and sale separately.
No direct recognition mechanism is established
Review any international treaty, general rules of national law, judicial assistance, a possible local proceeding and the availability of an independent claim. The result requires individual assessment.
There is a parallel proceeding or third-party rights
First establish representatives’ authority, coordination rules, security interests and priorities. A sale without coordination may breach local law or creditors’ rights.
Russian law and the law of the asset’s jurisdiction
| Issue | Russian proceeding | Foreign-law review |
|---|---|---|
| Composition of the estate | Article 213.25 sets Russian rules for inclusion and exclusion of an individual’s property | Title, registration, co-ownership and local property rights are verified |
| Practitioner’s authority | Article 20.3 defines rights and duties in the Russian case | Recognition, access to the court, bank or register, and the role of local counsel are examined |
| Protection of the asset | A Russian court may order measures within its jurisdiction | The local interim measure, evidential standard and enforcement authority are identified |
| Sale | Article 213.26 governs the sale plan and the separate order for foreign property | Enforcement, sale form, register, valuation, security, tax and currency rules are checked |
| Parallel proceedings | The Russian court conducts its case under Federal Law No. 127-FZ | National law determines recognition, coordination and the effects of local proceedings |
The role of the UNCITRAL Model Law
The UNCITRAL Model Law on Cross-Border Insolvency offers states a model for foreign representatives’ access to courts, recognition of foreign proceedings, relief and coordination. It is not a universally applicable law. States enact the model in national legislation and may depart from its text.
The current national enactment must be checked before any application. Russia is not listed in UNCITRAL’s published status table of jurisdictions that have enacted legislation based on the Model Law. It is therefore incorrect to state that Russia applies the Model Law directly or to transfer the mechanism of one country to another.
Documents for an initial assessment
- the court order commencing the procedure and evidence of the practitioner’s appointment;
- the jurisdiction, asset type and known place of registration;
- a register extract, acquisition agreement or other evidence of ownership;
- information on co-ownership, security, attachments and third-party rights;
- documents concerning a company, ownership interest, account or financial instrument;
- information on any parallel foreign proceeding;
- available translations and certification of court documents;
- the precise objective: obtaining information, preserving property, establishing authority or preparing a sale.
Do not conceal an asset: false information, nominal transfers or dissipation of property may affect the assessment of good faith, transaction avoidance and discharge. A lawful strategy begins with disclosure of the facts and examination of the applicable law.
Frequently asked questions
Can foreign real estate be sold through a Russian electronic auction?
The Russian procedure governs the sale process in the bankruptcy case, but transfer of title to foreign real estate also depends on the law and register of the jurisdiction where it is located. A Russian auction may be insufficient without a separate order, an admissible enforcement route and compliance with the local form of transaction.
Must a foreign bank respond to a Russian insolvency practitioner?
Not always. The practitioner’s right to make a request under Russian law does not automatically require a foreign bank to disclose information. Bank secrecy, recognition of authority, judicial assistance and the bank jurisdiction’s procedure must be examined.
Must the Russian bankruptcy first be recognised abroad?
That depends on the jurisdiction and the relief sought. Some national laws provide for recognition of a foreign proceeding or representative; other systems use different procedural mechanisms. There is no universal answer without identifying the country.
Can freezing a foreign asset be guaranteed in advance?
No. The court considers jurisdiction, evidence of ownership, risk of loss, third-party rights and other conditions imposed by local law. Some systems may also require counter-security.
Official sources
- Federal Law No. 127-FZ on Insolvency (Bankruptcy) — Articles 20.3, 213.25 and 213.26;
- Resolution No. 45 of the Plenum of the Supreme Court of the Russian Federation dated 13 October 2015, as amended;
- UNCITRAL Model Law on Cross-Border Insolvency;
- UNCITRAL status table of enacting jurisdictions;
- UNCITRAL Practice Guide on Cross-Border Insolvency Cooperation.
Need an assessment of a foreign asset in a bankruptcy case?
An initial consultation can identify the documents already available, the law that requires examination and the procedural step that matches the objective. The outcome of a foreign procedure cannot be guaranteed in advance.