Is the obligation to compensate for damages resulting from non-execution of a contract a principal debt which gives a legal ground for petitioning a court in order to recognize the respondents as insolvent (bankrupt)?

      In accordance with Art.3 of the Federal Law dated 8 January 1998, No. 6-FZ On Insolvency (Bankruptcy) (hereinafter – «the Insolvency Law») a characteristic feature of bankruptcy is inability of a legal entity to satisfy the creditors’ demands in respect of pecuniary obligations within the period set forth by law. In compliance with Art. 2 of the Insolvency Law a pecuniary obligation means a debtor’s obligation to pay to the creditor a certain amount of money under a civil contract and on other grounds specified by the Civil Code of RF. At the same time, the Insolvency Law does not specify any restrictions of the grounds for accrual of the obligation concerned, and the duty to compensate for the damages resulting from the failure to discharge the obligation is set forth by Articles 15 and 393 of the Civil Code of RF. A pecuniary obligation to compensate for the damages is undoubtedly a principal debt, which gives a legal ground for petitioning a court in order to recognize the debtor as bankrupt.

      Are the creditors with respect to the above obligation creditors in bankruptcy? Can they participate in the creditors meeting and if so, do they have a right to vote at the creditors meeting?

      Pursuant to Art. 2 of the Insolvency Law a creditor with respect to the obligation to compensate for the damages is a creditor in bankruptcy. According to para 1, Art. 12 of the above Law all the creditors in bankruptcy are the participants of the creditors meeting who have the voting right. The same regulation is set in para 2, Art. 64 of the above Law, and the Article concerned contains a special para 3, which establishes that only an official receiver, the head of the debtor, and a representative of the debtor’s employees attend the first creditors meeting without the right to vote. The Law says nothing about other participants of the creditors meeting who have no voting right.

      Can the petitions of joint claimants seeking recognition of each respondent – joint debtor be considered in one and the same proceeding, and is it possible to join in one and the same proceeding according to the regulations of Art. 105 of the Code of Arbitration Practice of RF the petitions of joint claimants seeking recognition of one of the respondents as bankrupt?

      Pursuant to para 1, Art. 28 of the Insolvency Law bankruptcy cases are entertained and resolved by the arbitration courts using the rules of the Code of Arbitration Practice of RF, with due regard for the specifics set forth by the Insolvency Law. In accordance with the Law the insolvency (bankruptcy) proceeding is arranged in such a way that it cannot be instituted with respect to two or several respondents-debtors. A separate proceeding should be initiated in respect of every debtor.

      On the other hand, all creditors’ claims against one and the same debtor against which the insolvency (bankruptcy) proceedings were initiated, should be considered in this particular proceeding only (para 4, Art. 11, Art. 36). Hence, if by virtue of the circumstances an arbitration court takes over two insolvency (bankruptcy) cases involving one and the same debtor, these cases should be joined into one proceeding.

      Can each of joint creditor-claimants petition at his discretion for recognition of each joint debtor-respondent as bankrupt?

      Joint creditors can initiate the insolvency (bankruptcy) proceedings against each of the joint debtors both jointly and severally, provided, of course, that the debt amount and the period of default meet the requirements set forth by law.