KK&P defended Metrostroy of the Northern Capital JSC’s $45 million claim in the register of creditors of Metrostroy JSC

The Commercial Court of the North-Western District upheld the position of the KK&P team, refusing to subordinate the claim of the client (Metrostroy of the Northern Capital JSC) for $45 million to Metrostroy JSC, which is bankrupt and was previously engaged in the construction of the subway in St Petersburg.

Despite contradictory practice, the courts of the three instances upheld the position that affiliation for subordination purposes cannot be established through the participation of the same public-law entities in the chains of ownership of the debtor and the creditor (in this case, St Petersburg, which was a direct participant in both the debtor and the firm’s client).

In addition, the court formulated a specific presumption of good faith of public-law entities, applying it to the subsidiaries of such entities:

“Taking into account the fact that, as a public legal entity, St Petersburg, a city of federal significance, does not pursue commercial goals but must act solely in the interests of addressing the social interests of the city’s population, there was no intention on behalf of the Company, which is controlled by the city of St Petersburg, to cause harm to creditors.”

Cassation Decision (in Russian): https://kkplaw.ru/files/A56-432-2019_20220420_Postanovlenie_kassacionnoj_instancii.pdf