Asset substitution in Russian bankruptcy means forming one or more business companies with the debtor’s assets and later selling the resulting shares or equity interests. The mechanism may be used in external administration and liquidation to preserve a business complex and generate funds for creditors.
Assets enter a company
Property and rights form the debtor’s contribution to the capital of a new company.
Debtor receives equity
The debtor becomes the founder and receives shares or equity interests as realisable assets.
Approvals matter
The route depends on the procedure, corporate authority and secured creditors.
The 2026 Change
From 3 April 2026, the current wording of Article 115 permits business companies rather than only joint-stock companies. Older documents describing an issue of shares as the sole model may therefore be outdated. The selected legal form and the rules governing shares or equity interests must be addressed.
External Administration
Asset substitution is included in the external administration plan based on a resolution of the debtor’s authorised corporate body. For one company, assets and property rights intended for business activity are contributed to its capital. Several companies may be used where the debtor conducts distinct activities.
Liquidation Proceedings
Article 141 permits substitution to maximise creditor recoveries. The creditors’ meeting approves the measure. Where debtor assets secure claims, every secured creditor must vote for the resolution. Article 115 otherwise applies to the extent compatible with liquidation.
Employees and Licences
Employment may continue under the statutory transfer rules. Licensed activity requires a separate review: a licence held by the debtor does not necessarily pass automatically to the new legal entity, and sector-specific law may require amendment or a new licence.
Preparation Checklist
- compare expected recovery with a direct asset sale;
- define the business complex to be contributed;
- review security, licences and corporate authority;
- obtain all required corporate and creditor approvals;
- select the company form, capital and ownership structure;
- complete valuation, registration and asset contribution;
- plan the sale of shares or interests and distribution of proceeds.
| Issue | External administration | Liquidation |
|---|---|---|
| Purpose | Restore solvency under the plan | Maximise creditor recoveries |
| Basis | Plan and authorised debtor body resolution | Creditors’ meeting resolution |
| Secured creditors | Security rights and plan conditions are addressed | All secured creditors must support the resolution |
| Result | Debtor receives shares or interests | Shares or interests are sold for distributions |
| Legal basis | Article 115 | Article 141 applying Article 115 |
Frequently Asked Questions
May a limited liability company be used in 2026?
The wording effective from 3 April 2026 refers to business companies rather than only joint-stock companies; the particular form remains subject to applicable special rules.
Are the assets sold immediately?
No. They are first contributed to a new company, and the debtor receives shares or equity interests for later realisation.
Is secured creditor consent required?
In liquidation, every creditor whose claim is secured by debtor property must vote for the measure.
Does a licence transfer automatically?
Not necessarily. The answer depends on the sector and type of licence.
How is this different from selling an enterprise?
An enterprise sale transfers the business complex to a buyer; substitution first forms a company and later sells its shares or interests.
Official Sources
Related guides: external administration, bankruptcy auctions and corporate bankruptcy.
Need to Compare Asset Realisation Routes?
An initial consultation can compare asset substitution, an enterprise sale and separate asset disposals.
BOOK AN INITIAL CONSULTATIONThis material is general information. The procedure depends on the case stage, asset composition, security, corporate approvals, licences and current special legislation.