Explanation

Under Article 20.3, Item 1, Par 7 of Federal Law No. 127-FZ dated October 26, 2002, On Insolvency (Bankruptcy), an insolvency receiver in a bankruptcy case has the right to request the necessary information about the debtor, the persons who sit on the debtor’s governing bodies,the controlling persons, their property (including property rights), contracting parties and the debtor’s liabilities to individuals, legal entities, state agencies, governing bodies of state non-budget funds of the Russian Federation and local self-government bodies, including information constituting business, commercial and banking secrets.

Regarding personal data:

The question of whether personal data can be disclosed at the request of an insolvency receiver remains a matter of debate, since it can be argued that personal data cannot be viewed as business, commercial or banking secret, as required under Article 20.3, Item 1, Par 7 of Federal Law No. 127-FZ dated October 26, 2002, On Insolvency (Bankruptcy). That said the existing body of case law is as follows:

Definition of the Supreme Commercial Court of the Russian Federation dated June 6, 2012 N ВАС-7243/12 in case N А14-3797/2011
Background: State Traffic Safety Inspectorate Department of the Internal Affairs Directorate for the Voronezh Region refused to disclose information as requested by a liquidation trustee, stating that disclosure of information regarding vehicle ownership by A.Yu. Kiselyov is regulated by Article 9 of Federal Law No. 152-FZ, On Personal Data, dated July 27, 2006 and is subject to written consent by the data subject. Since the liquidation trustee failed to produce the consent in question, the authority decided against disclosing the requested information.

Relief sought: Judicial review of court acts pertaining to the case on recognizing as illegal the refusal by a traffic safety authority to disclose information regarding motor vehicles.

Ruling: The court refused to refer the case to the Presidium of the Supreme Commercial Court of the Russian Federation, having rightfully concluded that the liquidation trustee was entitled to request up-to-date information on property owned by the debtor; the Russian law does not limit the volume of information that can be requested by a liquidation trustee.

Rationale: A liquidation trustee is entitled to request up-to-date information regarding property, i.e. property owned by the debtor. There are no legal restrictions as to the volume of information that the insolvency receiver can request.

Furthermore, since a court-appointed receiver and a liquidation trustee have the right to challenge transactions carried out by the debtor, they can receive information not only on property owned by the debtor, but also on the debtor’s transactions, as supported by case law.

(See Resolution of the Federal Anti-Monopoly Service for the Volga Region dated March 31, 2014 in case N А55-17643/2013; Resolution of the Federal Anti-Monopoly Service for the Northwestern district dated April 16, 2013 in case N А21-7716/2012).

Acting at insolvency receiver’s request

Insolvency (financial receiver):
А) Interim receiver – observation procedure
Б) Reorganization receiver – financial restructuring
В) Court-appointed receiver – administration
Г) Liquidation trustee – liquidation procedure

Interim receiver’s rights − Article 66 of the Federal Law on Insolvency (Bankruptcy)

• file a claim with a commercial court in his/her name for declaring null and void transactions and decisions, and also claims regarding the application of consequences of invalidity of void transactions that were concluded or executed by the debtor in breach of the provisions set out in Articles 63 and 64 of this Federal Law;
• object to creditors’ claims in cases specified by this Federal Law, for instance to plead the expiry of the limitation period;
• take part in commercial court hearings on verifying the validity of objections presented by the debtor regarding creditors’ claims;
• plead with the commercial court for taking additional measures to preserve the debtor’s property, in particular, for an injunction on carrying out transactions without the consent of the interim receiver that are not envisaged by Article 64, Item 2 of this Federal Law;
• plead with the commercial court for the removal from office of the debtor’s chief executive;
• obtain any information and documents concerning the debtor's activity;
• exercise other powers as per this Federal Law.

Reorganization receiver’s rights − Article 83 of the Federal Law on Insolvency (Bankruptcy)

• request the debtor’s chief executive to provide information on the debtor's current activity;
• take part in inventorying, if performed by the debtor;
• approve debtor’s transactions and decisions in cases specified in this Federal Law, and inform creditors of these transactions and decisions;
• plead with the commercial court to remove the debtor’s chief executive from office in cases specified by this Federal Law;
• plead with the commercial court to take additional measures to secure the debtor’s property, as well as to repeal these measures;
• file a claim in his/her own name with the commercial court to declare transactions and decisions null and void, and also regarding the application of consequences of invalidity of void transactions concluded or executed by the debtor in breach of the requirements set forth in this Federal Law;
• exercise other powers as per this Federal Law.

Court-appointed receiver’s rights − Article 99 of the Federal Law on Insolvency (Bankruptcy)

• dispose of the debtor’s property as per the external administration plan with due regard to the restrictions set out in this Federal Law;
• enter into settlement in debtor’s name;
• repudiate debtor’s contracts as per Article 102 of this Federal Law;
• file claims and applications with the commercial court in the debtor’s name to declare transactions and decisions invalid, as well as regarding the application of consequences of invalidity of void transactions concluded or executed by the debtor in breach of the requirements set forth in this Federal Law, and file claims to recover losses caused by action (failure to act) by members of the debtor’s governing boards, members of the board of directors (supervisory council), single member executive body, owner of the debtor’s property, persons acting on the debtor’s behalf under a power of attorney and other persons acting in accordance with the debtor’s corporate documents;
• exercise other powers as per this Federal Law.

Liquidation trustee’s rights − Article 129 of the Federal Law on Insolvency (Bankruptcy)

• dispose of the debtor’s property in the manner and under the terms set out in this Federal Law;
• dismiss the debtor’s workers, including the debtor’s chief executive, in the manner and under the terms set out in this Federal Law;
• repudiate contracts or other transactions in the manner set forth in Article 102 of this Federal Law. The liquidation trustee shall not be entitled to repudiate the debtor’s contracts when restoring the debtor’s solvency is impossible.

Consequently, depending on the stage in the insolvency process:

• Interim observation, financial recovery: no right to dispose of property or repudiate contracts.
• Administrative receivership, liquidation: right to (1) dispose of property; (2) repudiate contracts.

(1) A domain name is not property:
Under Definition of the Supreme Commercial Court of the Russian Federation dated July 4, 2008 N 5560/08 in case N А56-46111/2003, a domain name is not treated as protected intellectual property or means of identification that are subject to property rights.

Accordingly, the Supreme Commercial Court of the Russian Federation found unequivocally that a domain name cannot be viewed as an object or other property.
(2) A contract can be repudiated by a court-appointed administrator or liquidation trustee in strictly keeping with Article 102 of Federal Law on Insolvency (Bankruptcy).

Article 102. Repudiation of debtor’s transactions

1. The court-appointed receiver may repudiate the debtor’s contracts and other transactions within three months after the institution of receivership.
2. Only contracts or transactions that were not completed or performed in full by the parties can be repudiated, if these transactions prevent the debtor from recovering solvency or if the performance of these transactions by the debtor entails losses for the debtor compared to similar transactions concluded in comparable circumstances.
3. In cases envisaged in Item 2 of this Article, a contract shall be deemed terminated from the date all parties thereunder receive a statement by a court-appointed receiver repudiating the contract.
4. A party to the contract subject to repudiation may claim damages from the debtor resulting from the repudiation of the contract by the debtor.
5. The provisions set forth in this Article shall not apply to the debtor's contracts concluded under observation with consent from an interim receiver or during financial restructuring, if these contracts are concluded as per this Federal Law.
6. Contracts meeting the requirements set forth in Article 4.1, Item 4 of this Federal Law can be repudiated only insofar as relating to financial contracts between the creditor and the debtor.

Therefore, if the insolvency receiver’s request to disclose information, including personal data of domain name registrants and information on the contracts they concluded, is consistent with legal requirements, it has to be satisfied within seven days upon receipt, subject to a confidentiality clause.

If the request contains a requirement for the registrar to undertake any actions with the domain name (such as change the registrant) and/or a requirement to grant the right to perform independently actions with the domain name of a registrant subject to insolvency proceedings (such as change email addresses), and the request comes from an authorized person and is consistent with the law, a request of this kind has to be satisfied.

The registrar shall take a decision on satisfying a request of an insolvency receiver independently after consulting the relevant statues.