Successful representation of a client in a bankruptcy case

Client SIAMS LLC (Russia)

Description

Gorodissky & Partners’ business is intellectual property. Intellectual property involves money. Hence, development of technologies, commercialization, licensing, franchising are inevitable companions of intellectual property. Sometimes other IP side issues come into the picture. SIAMS LLC, a Russian company (Ekaterinburg) is a high-tech company offering in the Russian and foreign markets systems of panoramic microscopy for industry and science.

In the course of its research SIAMS used currency and ruble settlement accounts in the Ekaterinburg branch of the Commercial Bank LEGION for several years. However, in the summer of 2017, the bank faced serious problems. On July 07, 2017 the banking license was revoked, after which the court ruled that the bank should be declared bankrupt, so the bankruptcy proceedings began. Within the framework of this procedure, the bank’s bankruptcy commissioner (the Deposit Insurance Agency) began to dispute money transfer transactions made by the bank’s clients during the last month before the court accepted the application for declaring the debtor bankrupt. The list of such transactions included a number of currency and ruble transfers from SIAMS made in the period from June 30, 2017 to July 05, 2017 totaling 10.5 million rubles. The bankruptcy trustee filed a lawsuit in court, in which he demanded that these transactions should be recognized as concluded in preference to other creditors whose payments were already delayed or were not made on the relevant dates and obliged SIAMS to return the specified amount to the bank accounts so that it should be included in the bankruptcy assets.

Such interpretation of the actions and the requirement to return the amount of money did not suit SIAMS so they sought legal representation by Gorodissky and Partners.

Solution

After analyzing the factual circumstances accompanying controversial operations Gorodissky’s lawyers found out that there was a fact being absolutely important for the case:

A request for currency transfer and payment order were submitted by SIAMS LLC on June 30, 2017 (i.e. on the day of the massive delays in transfers of clients’ moneys by the bank) through the Bank-Client system to the Ekaterinburg branch of the bank at ten or eleven in the morning, i.e. before the working hours of most of the bank’s offices in the European part of Russia.

Thus, making payments by SIAMS LLC was subject to the objective circumstances, i.e. its location and the time of submitting payment orders to the bank, and not because of the bank giving it unlawful preference, as alleged by the bankruptcy trustee in his lawsuit. G&P’s lawyers collected and presented to the court evidence of these objective circumstances, which formed the basis for the judicial acts issued by the courts of three instances.

Besides, the bankruptcy trustee tried to prove that the operations carried out by SIAMS and, above all, the transfer of currency to its own account at another bank, were not usual for it. The lawyers however presented to the court evidence of such earlier operations by SIAMS on accounts at other banks, and also, taking into account the nature and recurrence of the company’s activities, evidence was provided that such operations were usual and were associated with different bank regulations in their capacity as currency control agents regarding various types of foreign trade transactions.

G&P lawyers were able to convince the court that since SIAMS was a high-tech company selling industrial equipment and concluding a relatively small number of transactions per year, a longer period should be used to assess whether the relevant operation was normal for it rather than the one proposed by the bankruptcy trustee (from the beginning of 2017). Moreover, in previous years, similar operations were carried out repeatedly, which was demonstrated to the court.

Result

It is interesting that, in general, in this category of disputes, the absolute majority of similar cases is resolved in favor of bankruptcy trustees. However, in this case, G&P lawyers were able to achieve a positive result for the client. The judgment of the Moscow Commercial Court, the judgments of the 9th Commercial Court of Appeal and the Moscow Region Commercial Court dismissed the claims of the bankruptcy trustee. The courts of three instances agreed with the arguments of the respondent about the existence of objective circumstances in the form of the time difference between the region where SIAMS LLC is located and the headquarters of the bank when performing the corresponding banking operations on the relevant dates. The courts also came to the opinion that SIAMS did not know about the difficult financial situation of the bank and that the fact the bank made transfers in preference to other creditors was not proved.