A settlement agreement in the bankruptcy of a Russian legal entity allows the company, registered creditors and public authorities to end the case on negotiated terms. A creditor vote alone is insufficient: the agreement takes effect only after approval by the Russian arbitrazh court. Personal bankruptcy settlements are covered on a separate page.
The agreement may be reached during supervision, financial rehabilitation, external administration or liquidation.
A majority of all registered votes and the consent of every secured creditor are required.
The court checks mandatory terms, authority, creditor rights and payment of first- and second-priority claims.
When a company may settle a bankruptcy case
Article 150 of Federal Law No. 127-FZ permits a settlement at any stage of a bankruptcy case. The person acting for the debtor depends on the procedure: the company director, administrative receiver, external administrator or bankruptcy receiver. If the settlement is a major or interested-party transaction, or the charter requires corporate consent, that approval should be obtained before the application is filed with the court.
| Stage | Debtor representative | Practical focus |
|---|---|---|
| Supervision | Company director | Corporate approvals and reliable funding evidence |
| Financial rehabilitation | Company director | Consistency with the recovery schedule |
| External administration | External administrator | Effect on restoring solvency |
| Liquidation proceedings | Bankruptcy receiver | Comparison with asset sales and statutory priority |
How creditors approve the agreement
The creditors’ meeting decides. Approval requires a majority of the total registered votes of bankruptcy creditors and public authorities, not merely a majority of those attending. Every creditor secured by the debtor’s property must also vote in favour.
What the terms should cover
The agreement must state how and when the debtor’s obligations will be performed. A workable document normally sets amounts, payment dates, interest, security, default consequences and funding sources. With the relevant creditor’s consent, Russian law allows discharge methods such as a transfer in lieu of performance, novation or conversion into corporate rights, provided other creditors’ rights are not infringed. Third parties may give a guarantee, surety or other security.
What the arbitrazh court checks
- Authority and process. The court reviews the meeting resolution, minutes, signatures and corporate approvals.
- Priority claims. First- and second-priority claims must be paid before approval.
- Equal treatment and certainty. The terms must not unlawfully prejudice a creditor and must be sufficiently definite.
- Legality. The court approves or rejects the document; it does not rewrite the commercial bargain for the parties.
Effect of court approval
From approval, the agreement binds the debtor, participating creditors, public authorities and any participating third parties. The bankruptcy case is terminated. If the agreement is approved during liquidation proceedings, the bankruptcy judgment and order opening liquidation are no longer enforced. A unilateral withdrawal is not permitted; breach may lead to statutory remedies and resumption of the case.
Preparation checklist
- Verify the creditor register, voting structure and all secured claims.
- Prepare a financial model and evidence of the funding source.
- Obtain the debtor’s required corporate approvals.
- Agree the payment schedule and security with creditors and participating third parties.
- Hold the creditors’ meeting and document the vote correctly.
- After first- and second-priority claims are paid, apply for court approval.
Frequently asked questions
Can the debtor settle with only one creditor?
A private arrangement with one creditor does not replace the statutory creditors’ meeting and court approval required for a bankruptcy settlement.
Is every secured creditor’s consent required?
Yes. In addition to the majority of all registered votes, every creditor secured by the debtor’s property must vote in favour.
Can the court amend the terms?
The court tests the submitted agreement against the law but does not create new commercial terms for the parties. Material changes normally require renewed approval.
Official Russian sources
- Article 150 of Federal Law No. 127-FZ;
- Article 156 on contents;
- Article 157 on third parties;
- Article 158 on court approval.
Related: liquidation proceedings, external administration, financial rehabilitation.
The voting structure, corporate approvals and risks of refusal can be checked against the documents of the particular case.
INITIAL CONSULTATIONUpdated 27 August 2026. This page provides general information and is not case-specific legal advice.