KK&P defended a western oil company against the invalidation of payments for oil supplies worth $87 million

The First Commercial Court of Appeal upheld the position of the KK&P team and refused to recognise as invalid payments of $87 million made by the Mari Refinery to our client (a foreign oil company which is among the top-5 worldwide) for oil supplies in the month before and the month after the initiation of bankruptcy proceedings.

KK&P Partner and head of the firm’s bankruptcy practice Nikolay Pokryshkin and Associate Maria Ushakova managed to convince the courts to interpret Clause 3 of Article 61.4 of the Bankruptcy Law broadly.

Courts often refuse to apply this immunity from a transaction if the conclusion of the contract and execution thereunder in favour of the debtor did not take place on the same day, referring to the non-compliance with the criterion of execution “immediately after” the contract.

However, a more adequate and progressive approach requires consideration of the substance of the obligation and the parties’ objective ability to perform the contract within the shortest possible time, which may be several weeks or months. In this case, the courts agreed that Clause 3 of Article 61.4 of the Bankruptcy Law was to be applied taking into account the volume of supplies, the maximum technical capabilities of oil transportation, storage and refining, recognising supplies within 34 days of the date of the contract as provided “immediately after” its conclusion, which eliminated the challenge of payments as preferential.

Appeal Decision (in Russian): https://kkplaw.ru/files/A38-4254-2019_20220606_Postanovlenie.pdf

First Instance Decision (in Russian): https://kkplaw.ru/files/A38-4254-2019_20211130_Opredelenie.pdf