Who can seek settlement termination?
Article 164 does not permit a court-approved settlement to be terminated by a private agreement between an individual creditor and the debtor. Judicial termination applies to all bankruptcy creditors and authorised public bodies, rather than one dissatisfied participant alone.
A bankruptcy creditor, several creditors and/or authorised bodies may apply if they held at least one quarter of the relevant claims on the settlement approval date. Grounds are non-performance or substantial breach concerning their claims, which together constituted at least one quarter of the claims on that date.
Formation is explained in the corporate bankruptcy settlement guide. This article addresses the next stage: breach of court-approved terms.
How to calculate one quarter of claims
| Check | Reference point | Common error |
|---|---|---|
| Calculation date | Settlement approval date | Using only today’s outstanding debt |
| Applicants | Creditors and/or bodies whose obligations were breached | Substituting any meeting participants |
| Claim proportion | At least 25% of the Article 164 base | Counting a voting majority rather than claims |
| Grounds | Non-performance or substantial breach of relevant terms | Treating changed commercial interests as sufficient |
Hypothetical example, not a reported case. Relevant claims at approval total RUB 10 million. The applicant’s claim is RUB 3 million, or 30%. The size threshold is met, but the statutory breach must also be proved. A creditor with RUB 2 million, or 20%, should not be said to have a right to terminate the entire settlement based solely on that share. A joint application requires checking the other applicants and their claims.Which court and which documents?
The commercial court that considered the bankruptcy case hears the application. Under Article 165 it is signed by creditors or authorised bodies whose claims were not performed under the settlement and/or whose terms were substantially breached.
- 1. Reconcile the records
Approved settlement, original register and actual performance. - 2. Check standing
Applicants, claim proportion and breached terms. - 3. Apply
To the previous court with calculations and evidence. - 4. Attend the hearing
The court assesses grounds and issues an order.
Prepare the settlement and approval order, relevant dated register, payment deadlines, bank statements, claim-share and debt calculations, correspondence and other evidence of the particular breach. Identify the case, applicants, legal basis and precise requested relief. Check representative authority where applicable.
The court schedules a hearing and notifies the statutory participants and settlement third parties. The resulting order is immediately enforceable and may be appealed under the Commercial Procedure Code. It refuses termination where grounds are absent. Filing alone does not cancel settlement terms.
What happens to the case and claims?
Article 166 provides for reopening unless procedures are already underway in a new bankruptcy case. Reopening introduces the procedure during which the settlement was made. Where a new case exists, the creditors file there under the special Article 166(1) rule.
On reopening, claim amounts are based on the register at the settlement approval date. Claims lawfully paid during performance are not registered again, subject to the statutory exceptions. Deferral, instalment and discount terms cease for the portion unpaid at termination.
Payments received
No general rule requires returning every payment. The lawfulness of satisfaction is assessed.
Other creditors’ rights
Return is required where the recipient knew or should have known of infringement; the claims are then restored.
First and second priority
Termination does not require these creditors to return payments received towards their debts.
The post-termination calculation should therefore not mechanically repeat the original total. Compare the register, discount, performance and grounds for any repayment.
Can a creditor enforce without termination?
Yes. Article 167(1) allows creditors, on debtor non-performance, to ask the court that heard the bankruptcy case for a writ covering remaining unpaid claims without terminating the settlement. This is a separate route, not a way around Article 164’s threshold for termination of the entire settlement.
The choice depends on the objective and facts: enforce an individual unpaid claim or seek termination with collective procedural consequences. Keep the requested relief distinct. Appealing the settlement approval order is also a separate Article 162 route, rather than termination for a later breach.
Frequently asked questions
Can the settlement be terminated for just one creditor?
Article 164 does not permit a private creditor-debtor agreement to do this. Its judicial mechanism applies to all bankruptcy creditors and authorised bodies.
Is the 25% threshold calculated on the filing date?
Article 164 ties the proportion to the approval date. Do not substitute the current balance without checking the original register.
Does any late payment automatically end the settlement?
No. Termination requires court consideration and establishment of Article 164 conditions.
Must all earlier payments be returned?
There is no general requirement to return everything. Article 166 makes an exception for recipients aware, or required to be aware, of infringement of other creditors’ rights, and separately protects first- and second-priority repayment.
What if a creditor cannot initiate termination?
On non-performance, consider a writ under Article 167 without termination. The unpaid amount and settlement terms must be substantiated.
Legal sources
- Law No. 127-FZ, Article 164: grounds and claim threshold.
- Article 165: court, application and order.
- Article 166: termination consequences.
- Article 167: enforcement without termination.
Check the breach and enforcement route
Prepare the settlement, order, register and payment records. A consultation can compare termination standing with obtaining a writ.
Discuss settlement performance →