This guide concerns avoidance within a Russian bankruptcy case. A creditor tracing property transferred to a relative outside bankruptcy uses a different set of remedies, covered in the separate enforcement guide.
Not every deal
A statutory ground, evidence and harm to the collective process must be established.
Not one period
One month, six months, one year and three years apply to different tests.
Court decision
The manager investigates, but the commercial court decides avoidance and remedies.
Transactions that may be challenged
Sales, gifts, divisions of property, assignments, repayments to selected creditors, security, transfers of money and other acts affecting the estate may be reviewed. A family connection, cash settlement or low price is a warning sign, not a substitute for the legal test.
Look-back periods under Articles 61.2 and 61.3
| Ground | Period | Core evidence |
|---|---|---|
| Unequal consideration | One year before the court accepted the petition, or after acceptance | Materially worse price or terms assessed in the full context |
| Prejudice to creditors | Three years before acceptance, or after acceptance | Purpose, actual harm and the counterparty’s knowledge, subject to statutory presumptions |
| Creditor preference | Normally one month; six months in specified cases | A better recovery than the ordinary ranking would provide and any additional statutory conditions |
Who may apply
The financial manager may bring the application in an individual case. A registered creditor or authorised public body may also apply if the statutory threshold is met—more than ten per cent of registered claims, calculated with the exclusions prescribed by Article 61.9.
What the court examines
- contracts, payments, handover records and title registration;
- market value and whether consideration was actually received;
- the debtor’s financial position at the relevant time;
- connections, knowledge and commercial purpose;
- the sequence of transfers and the asset’s later destination;
- the effect on collective creditor recovery.
There is no universal statutory percentage that automatically makes a price unequal. The court considers the transaction in context.
Consequences of avoidance
Property received is generally returned to the bankruptcy estate; value may be recovered if return in kind is impossible. The counterparty’s restored claim and its ranking depend on the ground and conduct. A judgment does not guarantee collection if the asset or respondent cannot satisfy it.
Defending a genuine transaction
- Keep the contract, proof of payment and handover records.
- Trace the lawful source and movement of funds.
- Support market value as at the transaction date.
- Explain the genuine commercial or personal purpose.
- Address knowledge of insolvency where the test makes it relevant.
- Check limitation and the applicant’s standing.
Preparation before filing
A debtor should not conceal an awkward transaction or fabricate records retrospectively. Prepare a chronology, collect banking documents and disclose the facts to the financial manager. See the personal bankruptcy procedure guide for the wider process.
Frequently asked questions
Will a flat sale three years before filing be reversed?
Not automatically. Three years relates to the prejudice test; every other element still has to be proved.
Are all family transactions invalid?
No. A connection affects presumptions and evidence, but the statutory ground and facts must still be established.
Can an ordinary bank payment be challenged?
It depends on preference, timing, ranking and knowledge. The statute also protects specified ordinary-course transactions.
Can every creditor apply directly?
No. A direct special-avoidance application must satisfy Article 61.9, including the registered-claim threshold.
Does return guarantee payment to creditors?
No. The judgment must be enforced and any proceeds are distributed under bankruptcy ranking rules.
Official sources
Need to assess avoidance exposure?
An initial consultation can review dates, documents, payments and possible defences without promising a predetermined outcome.
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