The Supreme Court confirmed the possibility to challenge the chain of asset tunneling transactions made by the company becoming bankrupt and reclaim assets for bankruptcy estate from the final buyer in bankruptcy proceedings. The bankruptcy court may consider such claims even if the final buyer is an individual. In the event that the chain of interlinked transactions covers the disposal of assets to the final buyer-individual, the bankruptcy court is entitled to annul the transactions and return assets into bankruptcy estate in bankruptcy proceedings. Submission of a separate claim against the final buyer-individual to an ordinary court is not required.

In the case examined by the Supreme Court, the bankruptcy manager and the creditors of the debtor claimed annulment of the chain of interlinked asset tunneling transactions in respect of real property and return of the property from the final buyer to bankruptcy estate. The property was disposed prior to the bankruptcy through the chain of transactions between the affiliated companies and was eventually acquired by the beneficiary-individual who was a part of the debtor’s group.

The courts granted the claim in part, annulling the transactions in which companies were the buyers. However, the courts dismissed the proceedings in part of reclamation of assets from the final buyer-individual due to the lack of state commercial (arbitrazh) courts’ jurisdiction over this claim.

However, the Supreme Court did not agree with the lower courts. The Supreme Court drew the attention of the lower courts to the need to examine the factual circumstances of disposal of assets by the debtor prior to the bankruptcy and find out whether these actions were directed at creation of real economic relations or, on the opposite, at fraudulent creation of illusion of a good-faith purchaser in order to exclude foreclosure of property by creditors.

In the event that the chain of successive sales transactions with different buyers, including individuals, covers one transaction directed at disposal of assets to the final beneficiary, such covered transaction may be annulled as a single suspicious transaction according to Article 61.2 of the Federal Law “On Insolvency (Bankruptcy)”. In this case the bankruptcy manager and the creditors of the debtor may reclaim property from the final buyer in bankruptcy proceedings, even if the final buyer is an individual. In this case submission of a claim against the final buyer-individual to an ordinary court is not required (Ruling of the Judicial Panel on Economic Disputes of the Supreme Court of the Russian Federation dated 27.08.2020 No. 306-ЭС17-11031(6) on case No. А65-27171/2015).