Text of the book “Legal status of an insolvent debtor. Monograph"

Other definitions

The Civil Code of the Russian Federation defines the debtor

as a person obliged, by virtue of an obligation, to perform a certain action in favor of another person (creditor), such as: transfer property, perform work, pay money, etc., or refrain from a certain action [2].

In accordance with the Law “On Insolvency (Bankruptcy)” the debtor

a citizen, including an individual entrepreneur, or a legal entity who is unable to satisfy the demands of creditors for monetary obligations and (or) fulfill the obligation to make mandatory payments within the period established by Federal Law is recognized[3].

In accounting by debtors

are legal entities and individual entrepreneurs that have receivables to the creditor organization. Settlements with debtors are recorded in the account “Settlements with various debtors and creditors”[4].

In accordance with the Law “On Enforcement Proceedings,” a debtor is a citizen or organization obligated by a writ of execution to perform certain actions (transfer funds and other property, fulfill other obligations or prohibitions provided for by the writ of execution) or to refrain from performing certain actions (Article 49 )[5].

In accordance with the Law “On the protection of the rights and legitimate interests of individuals when carrying out activities to repay overdue debts,” a debtor is an individual who has an overdue monetary obligation (Article 2)[6].

The obligatory condition is the presence of legal capacity and tortious capacity, that is, the existence of the right and the ability to bear responsibility for violation of the agreement.

Text of the book “Legal status of an insolvent debtor. Monograph"

K. B. Koraev LEGAL STATUS OF AN INSOLVENT DEBTOR Monograph

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INTRODUCTION

In legal science, the study of the legal status of an insolvent debtor, as a rule, was limited to its legal capabilities within the framework of a bankruptcy case. Simply put, the legal position of an insolvent debtor was essentially that of an insolvent debtor.

This paper makes an attempt to theoretically study the legal status of an insolvent debtor, whose legal capabilities are not limited to the framework of a bankruptcy case.

The starting point of the study was the concept of “insolvency,” which in legal science was understood as the inability of a debtor to fulfill monetary obligations, regardless of whether the debtor is a business or non-entrepreneurial entity.

The conducted research made it possible to point out the incorrectness of this definition and, for the first time in legal science, to define the concept of “insolvency” as the inability to fulfill monetary obligations in connection with business activities.

The basis for this conclusion was a retrospective study of the process of the emergence of bankruptcy law in different states. It showed that insolvency does not characterize any inability to pay, but such inability that is based on activities related to the advance of capital1, which is the only source for regular payments. In this era, such activity was trade; in modern times, such activity is entrepreneurship.

Disclosure of the content of the concept of “insolvency” as a category characterizing the state of a business entity made it possible for the first time in legal science to define an insolvent debtor as an entrepreneur unable to fulfill monetary obligations.

However, as a result of the study, it is concluded that the content of the doctrinal concept of “insolvent debtor” should not coincide with the content of this concept, which must be developed for the purposes of legal regulation. In the latter case, the content of the concept of “insolvent debtor,” in addition to entrepreneurs, should cover persons who, from an economic point of view, are not insolvent, namely: citizens who do not have the status of an individual entrepreneur, unpaid liquidated and absent debtors.

The conclusion drawn is dictated solely by considerations of convenience when using the category “insolvency”.

In this work, the place of the citizen-consumer in the system of insolvency relations is defined differently. In particular, if modern legal science and current legislation are based on the concept that the institution of bankruptcy of consumer citizens should be aimed at freeing them from unpayable debts, then this work concludes that the institution of consumer bankruptcy should be aimed at eliminating insolvent citizens from spheres of consumption of bank credit.

The study of the legal status of an insolvent debtor made it possible for the first time in legal science to indicate that in the system of Russian law it is more correct to distinguish not the institution of bankruptcy law, but the institution of legal regulation of insolvency, consisting of two sub-institutions: financial recovery and bankruptcy law. The rules of financial recovery should regulate relations related to the prevention of insolvency of a debtor or the restoration of solvency of a relatively or absolutely insolvent debtor, while the rules of bankruptcy law should regulate relations related to the liquidation of an insolvent debtor as a subject of credit relations.

In conclusion, the author would like to express his gratitude to scientists and practicing lawyers who, with their comments and suggestions, provided invaluable assistance in the preparation of this work, namely: Doctor of Law, Professor, Head of the Department of Commercial Law, Faculty of Law, St. Petersburg State University, Vladimir Fedorovich Popondopulo

;
Doctor of Law, Leading Researcher of the Department of Civil Legislation and Process of the Institute of Legislation and Comparative Law under the Government of the Russian Federation Olga Aleksandrovna Belyaeva
;
Doctor of Law, Professor of the Department of Civil and Business Law of the Higher School of Economics Alexey Yanovich Kurbatov
;
Candidate of Legal Sciences, Head of the Department of Customs Affairs and Law of the Irkutsk State Transport University Alexey Aleksandrovich Tyukavkin-Plotnikov
;
Candidate of Legal Sciences, Associate Professor of the Department of Customs Affairs and Law of the Irkutsk State Transport University Alexander Anatolyevich Pakharukov
;
lawyer, legal expert Pavel Viktorovich Konde
, as well as the entire staff of the Department of Business and Corporate Law of the Moscow State Law University named after O. E. Kutafin represented by Doctor of Law, Professor, Head of the Department
Inna Vladimirovna Ershova
.

Chapter 1 THE CONCEPT OF AN INSOLVENT DEBTOR AS A SUBJECT OF LEGAL

§ 1. The concept of insolvency

The concept of “insolvency” is inextricably linked with bankruptcy law and appears simultaneously with the rules governing insolvency relations.

The peculiarity of these relations is that they belong to the group of those relations that “exist on their own and only under certain conditions are transformed into legal relations”2. This means that the concept of “insolvency” is one that reflects social relations that exist before legal regulation by the rules of bankruptcy law. Therefore, in order to correctly disclose the content of the concept of “insolvency”, it is necessary, first of all, to identify those social relations that gave rise to bankruptcy law, and with it its main category – “insolvency”.

To solve this problem, it is necessary to turn to the history of the formation and development of competition law.

Competition law has its historical beginnings from the times of Roman law. Speaking about the Roman period of development of the institution of insolvency, it is necessary to remember that “in the law of ancient peoples we would look in vain for traces of the complex institution that the institution of insolvency currently appears to be”3.

In the era of Roman law, the formation and development of norms took place that regulated in enforcement proceedings the process of satisfying the demands of the debtor's collectors in the event of insufficiency of his property.

In the legal literature, these norms are qualified differently. Some scientists believe that they formed competition law4. Others believe that these norms are incorrectly classified as bankruptcy law5.

It seems that the latter of the above opinions is justified. Supporters of the first position do not take into account that the rules governing cases of resolving competition of rights6 of claimants in Roman law did not represent an independent order establishing the procedure for satisfying all cash

creditors of the debtor in conditions of insufficiency of his property. These rules were only part of the general enforcement proceedings and regulated the relations that arise when several creditors-collectors collect debts at the expense of the debtor’s property, which is insufficient for their full repayment.

The conclusion made clearly manifests itself in the peculiarities of the legislation of the Roman era. Thus, these norms were applied only in the event that the claims of the collectors exceeded his assets, and not the claims of all his cash creditors; it was mandatory to have several collectors, not creditors; the sale of property did not relieve the debtor from debts; only creditors whose claims had become due joined the process of resolving competition of rights; The initiative to apply the rules on allowing competition between claimants' rights belonged exclusively to creditors.

There are similarities and differences between the described procedure for resolving competition of creditors' rights and bankruptcy law. The similarity is manifested in the fact that in both the first and second cases the object of the conflict of rights is the property of the debtor as a whole, and not part of it. The difference is related to the subjects whose rights collide. In the first case, the competition of rights is resolved between creditors-collectors whose claims have come due, and in conditions of insolvency - between all existing creditors, regardless of whether their claims have come due or not.

Thus, in the era of Roman law, the emergence and development of legal regulation of relations related to the resolution of competition of the rights of creditor-collectors took place. These norms did not form bankruptcy law, but represented an institution of general enforcement proceedings designed to resolve the conflict of rights of the debtor's collectors.

The emergence and development of these rules in the Roman era was of great importance for the emergence of the institution of insolvency in later periods of social development. Many mechanisms of legal regulation of the Roman era became “undoubtedly the cornerstone on which the entire complex edifice of competition law and process was subsequently built”7.

The origin of bankruptcy law, and with it the category of insolvency, took place in Italian cities

during the Middle Ages. The emergence of insolvency legislation in this place was primarily due to the fact that trade in Italian cities was at a high stage of development8. During this period, the need to protect public credit in the field of trade was increasingly felt. The heavy forms of the Roman debt collection process could not satisfy the credit needs of the trading cities of medieval Italy. They were replaced by new principles of bankruptcy proceedings10.

The formation of bankruptcy law in France

was also preceded by the emergence of rules regulating cases of conflict between several collectors against the same debtor within the framework of enforcement proceedings. As in the era of Roman law in France, “if the debtor’s property was not sufficient to cover all the penalties, then the debtor’s condition was called deconfiture or insolvalitite”11.

In France, bankruptcy law appears in wealthy trading cities that served as the focus of extensive trade12. The development of trade and credit increasingly required the creation of legal norms to ensure the protection of public credit as a public need. Therefore, the legal form allowing competition between the rights of claimants within the framework of enforcement proceedings, from a practical point of view, was an anomaly for trade turnover, “which sooner or later had to be destroyed”13.

The anomaly was eliminated by creating an independent order, different from enforcement proceedings, that ensures the protection of public credit in trade. This procedure is called the competitive process.

It differed from enforcement proceedings, first of all, in that it opened with the provision of a general protective arrest on all the debtor’s property, with a call on all creditors to the general liquidation of the debtor’s affairs14. The competitive process was based on the principle of insolvency, while the enforcement proceedings were based on the principle of non-payment.

French bankruptcy law, based on the principle of insolvency, developed separately from general enforcement proceedings, which was based on the idea of ​​non-payment. The final legislative distinction between the concepts of insolvency (faillitte et banqueroute) and non-payment (deconfiture, insolvalitite) was established in the Napoleonic era. This distinction was reflected in the structure of legislation. Proceedings in cases of non-payment or insufficiency of the debtor's property to cover the penalties brought against him in the executive instance were determined by the Charter of Civil Procedure of 1806, and the insolvency process, ensuring the protection of trade credit, was assigned to the department of commercial courts and enshrined in the Commercial Code15.

Thus, in France, the development of bankruptcy law was determined by the needs of trade, which developed under the influence of Italian merchants16. For this reason, at the time of its inception, French bankruptcy law appears to us as commercial insolvency law. At that time, the historical direction of the legislation was to gradually isolate the insolvency process as a means of protecting trade credit. The concept of insolvency was associated exclusively with trade turnover, and general enforcement proceedings were carried out in cases of non-trade persons17. French legal doctrine and legislation used only insolvency, expressed in cessation of payment, as a criterion for insolvency. Historically, non-payment was unknown to French law as a criterion for insolvency.

A similar method of forming bankruptcy law is typical for England

. As in France, here the emergence of this right was preceded by the development of rules governing the resolution of competition between the rights of creditor-collectors. These norms represented an institution of general enforcement proceedings, which was based on the principle of non-payment.

However, as trade relations developed, the need to protect personal credit with a special form of production was realized. Under such circumstances, the so-called bankruptcy process developed in England, the details of which were gradually determined by the laws on commercial insolvency (bankruptcy laws). Unlike proceedings in cases of unpaid debts, the bankruptcy process was based on the criterion of insolvency.

In England, as in France, the bankruptcy process arises as an independent procedure designed to protect personal credit, in contrast to the non-payment process adjacent to the proceedings in the executive instance. The difference between non-payment proceedings and bankruptcy proceedings was quite significant18.

Thus, in England, the emergence of bankruptcy law also occurred in the trading world, which felt the need to protect trade credit. In doctrine and legislation, we also see a clear distinction between the concepts of “non-payment”, which underlies general enforcement proceedings, and “insolvency”, which is a condition for opening a competitive process.

The formation of bankruptcy law in Germany and Russia took place completely differently.

In Germany

The formation and development of bankruptcy law was preceded by the emergence of rules governing the resolution of conflicts of claims of creditors-collectors in enforcement proceedings19.

As trade developed, these rules turned out to be unsuitable for resolving the competition of rights that occurred in connection with the insolvency of the debtor. This predetermined the need for special competition legislation.

The initial development of German competition legislation was due mainly to the legal literature and judicial practice of the 17th century. German writers defined bankruptcy proceedings as legal proceedings caused by non-payment

debtor and with the goal of dividing among creditors property that is insufficient to cover debts20.

The further development of German bankruptcy law took place within the framework of local sources. Their review allows us to note that the condition for opening bankruptcy proceedings in Germany was non-payment

, and bankruptcy proceedings were considered not as an independent legal order, but as a type of enforcement proceedings.

Thus, according to the General Judicial Charter of Prussia of 1793, the conditions for opening bankruptcy proceedings were the non-payment of the debtor and the confluence of several creditors. At the same time, according to the legislator, the competitive process was a form of enforcement proceedings.

In accordance with the General Judicial Charter of 1796 of the Austrian Empire, the condition for opening bankruptcy proceedings was also the non-payment of the debtor.

The main features of bankruptcy proceedings in Bavaria were determined by the statute of 1616, the norms of which regulated the resolution of the confluence of rights of claimants in enforcement proceedings. Subsequently, the rules on bankruptcy proceedings were defined in the judicial code of 1753, the rules of which were applied only in case of non-payment of the debtor.

In Bremen, according to the Charter of 1843, bankruptcy proceedings were also opened on the basis of the debtor’s non-payment21.

Thus, German bankruptcy law, in essence, was an institution of enforcement proceedings designed to resolve the conflict of rights of all existing creditors of the debtor. Therefore, during the formation of German bankruptcy law, only the criterion of non-payment was used as an insolvency criterion, which was not known to French and English bankruptcy law.

In Russia

The process of development of bankruptcy law was similar to the development of German insolvency law.

As in other countries, the emergence of bankruptcy legislation was preceded by the emergence of rules governing the resolution of competition between the rights of creditor-collectors. These norms were enshrined in Art. 68 and 69 of the Karamzin list of Russian Pravda.

There is an opinion in the scientific literature that the above rules are an ancient competitive process in Russia22. This position is controversial, since the provisions of Art. 68 and 69 of the Karamzin List regulated cases of resolving competition between the rights of creditors-collectors of the debtor and were part of the institution of enforcement proceedings.

In legal science, the most substantiated opinion seems to be that the indicated provisions of the oldest legislation of Russia should be qualified as the rudiments of the competitive process, but not yet as insolvency legislation23.

As trade and credit develop, the need for the creation of a special law aimed at protecting public credit increases. This thought occupied the legislator throughout the 18th century.

In Russia, as in Germany, the formation of insolvency legislation occurred by adapting the rules governing the resolution of competition between creditor-collector rights in enforcement proceedings to the existing needs of protecting public credit in the trading world. This is clearly evidenced by the content of the Decree of February 6, 1735, according to which the need to develop a codified act of insolvency was caused by the case of competition of rights that arose in the private case (competition) of Meyer24.

The described feature of the formation and development of bankruptcy law in Russia influenced some of its properties. Thus, initially, the basis of competition law was the criterion of non-payment, and the opening of the competition process was allowed if there were several creditors.

Some of these characteristics existed until 1998, i.e. until the adoption of the second Federal Law of January 8, 1998 No. 6-FZ “On Insolvency (Bankruptcy)”25 (hereinafter referred to as the Bankruptcy Law of 1998).

The formation of bankruptcy law in Russia also occurred under the influence of trade turnover and credit, despite the fact that trade relations in Russia were underdeveloped26. The needs of trade turnover for credit protection were met through the creation of bankruptcy law norms on the basis of general enforcement proceedings, based on the principle of non-payment.

Thus, the history of the formation and development of bankruptcy law in the countries examined shows that the need for the protection of public credit in undeveloped civil circulation, including trade, among all nations was ensured by general norms of enforcement proceedings regulating the resolution of conflicts of rights of claimants and based solely on the principle of non-payment . The gradual development and complication of such type of activity as trade revealed the inability of the rules of enforcement proceedings to ensure the protection of trade credit and required the creation of new rules, the adoption of which created the institution of trade insolvency.

Despite the fact that the basis for the emergence of bankruptcy law among all nations was trade27, the further development of rules on trade insolvency depended on the degree of development of trade activity. In countries where trade was at a high stage of development (Italy, France, England), the need for the protection of trade credit could not be ensured by transforming the norms of general enforcement proceedings to the needs of trade. This led to the creation of new norms, different from the norms of general enforcement proceedings, which formed the institution of commercial insolvency. In countries where trade was at a low stage of development (Russia, Germany), the need for the protection of trade credit was ensured by transforming the norms of general enforcement proceedings to the needs of trade. The transformation of these norms occurred by extending the general norms of enforcement proceedings, which resolve the conflict of rights of the debtor's collectors, to all creditors of the debtor. This also led to the formation of the institution of insolvency.

These development trends have had a significant impact on the nature of competition law in the respective countries.

In Italy, France and England, simultaneously with the advent of new bankruptcy law, a new purpose and basis for insolvency arose, significantly different from the purpose and basis of competition in general enforcement proceedings. In the listed countries, the purpose of bankruptcy law was the liquidation of the debtor's business, involving the convening of all creditors of the merchant, regardless of their number, to satisfy their claims at the expense of the value of the property. Since the purpose of bankruptcy proceedings was to liquidate the debtor’s trade business, and not to resolve the conflict of creditors’ rights, non-payment as a basis for competition in general enforcement proceedings turned out to be unsuitable for the new bankruptcy law. In these countries, a previously unknown category of “insolvency” appeared.

In Germany and Russia, on the contrary, simultaneously with the transformation of the norms of general enforcement proceedings into competition law, there was a transformation of the purpose and basis of the competition in enforcement proceedings. The purpose of the bankruptcy law of these countries was to resolve the conflict of rights of the debtor's creditors. Achieving this goal entailed the termination of the debtor's affairs. The identity of the main purpose of bankruptcy proceedings and the purpose of competition in enforcement proceedings made it possible to transform the non-payment criterion that existed in general enforcement proceedings into a new bankruptcy law.

Thus, the emergence of the category “insolvency” was associated with the emergence of bankruptcy law in countries with a developed trading system

, in which the specified right appeared as a new legal order, different from competition in enforcement proceedings, suggesting a qualitatively new goal and basis for insolvency.

If the emergence of the category of “insolvency” occurred on the basis of trade, then the question arises: what feature of trading activity is the source of its occurrence?

To answer the question posed, it is necessary, first of all, to identify the difference between trading and non-trading activities in the era of the emergence of bankruptcy law.

A feature of trade of this era was that “in the trading world, credit is of decisive importance, a necessary condition for which is the accuracy and punctuality of payments on debt obligations”28.

The accuracy and punctuality of payments are ensured at the expense of the merchant’s property, with which he is responsible for his obligations. But the merchant's property is heterogeneous from an economic point of view. It can be divided into two types: property

, used in the process of personal consumption, including money spent for the specified purpose, and
money (merchant capital)
29 that the merchant uses in trading activities. The economic difference between the specified property comes down to the fact that the source for systematic payments in trade is only merchant capital. The value of other property, including the value of goods purchased for resale, is not a source for systematic payments for trade transactions. It can act as a source of payment only in one case - when the merchant fails in commercial affairs and all his creditors are called to a competition to satisfy their claims. Only in this case, the source of payment will be the value of the merchant’s entire property, and not his merchant’s capital.

The economic movement of merchant capital is usually expressed by the following formula (1):

D – T – D',

(1)

where: D – money invested (advanced) by the merchant;

T – product;

D' – money: previously invested (advanced) and profit.

From the content of the above formula (1) it follows that the process of trading activity represents acts of purchase and sale of goods. In the act of purchasing goods, the merchant is forced to part with merchant capital, and at the same time with the source of trade payment, since the goods purchased with the specified capital are not the source of payment for trade transactions. By completing the act of selling the purchased goods, the merchant again takes possession of merchant capital in an increased amount, and at the same time - a source for trade payments. Under these circumstances, trading activity presupposes the constant advance of merchant capital, which is the only source of trade payment, i.e., the investment of capital in the sphere of circulation in order to receive it again in an increased amount30. If the merchant withdraws the advanced merchant capital, then he is able to make trade payments and repeat the circulation of merchant capital again. If the merchant fails to extract the advanced capital, then he loses the ability to pay, regardless of the size of the value of his property, and at the same time, the ability to continue trading activities31.

The basis of non-trade activities in the era of the formation of bankruptcy law was production, which was outside the scope of the rules of bankruptcy law and the category of insolvency. This was due to the fact that in the era of pre-capitalist production, trade and production had significant economic differences. Firstly

, unlike trade, production activity was not based on credit, on the basis of which bankruptcy law appeared in all states.
Secondly
, production activity was not based on the advance of capital.

Production during the specified historical period is usually expressed by formula (2):

T – D – T.

(2)

The above formula (2) allows us to note that pre-capitalist production did not involve the use of such a specific product as money, which, being the source of payments from the manufacturer, would be advanced into the sphere of circulation for the purpose of their subsequent extraction32. “Consequently, in circulation C – M – C, the expenditure of money has no relation to its return inflow”33. Under this circumstance, from an economic point of view, the property of representatives of non-trading activities was homogeneous and did not imply advance payment. In this case, the only source of payment was the value of all the producer’s property, the insufficiency of which excluded the possibility of fulfilling the monetary obligation.

Thus, trading activity based on credit is based on the advance of the source of payment (merchant capital). In such a situation, the excess of the amount of monetary obligations over the value of the debtor’s property (non-payment) does not matter for determining the solvency of the merchant34, since the source of his payment is not the value of his property, but the advanced merchant capital. The merchant is wealthy (able to pay) as long as he manages to extract the advanced merchant capital from circulation35. Only the impossibility of extracting the advanced merchant capital can deprive the merchant of a source of payment, and at the same time make him insolvent, regardless of whether the value of his property exceeds the size of the creditors' claims or not36. For this reason, in countries with a developed trading system, the norms of enforcement proceedings based on non-payment did not correspond to the economic essence of trade and could not ensure the protection of trade credit, which led to the emergence of bankruptcy law based on a new category - insolvency - characterizing the inability of a person to extract from the sphere circulation of advanced merchant capital.

Unlike trade, non-trading activities not based on credit were not based on advances. Under this condition, the only source of fulfillment of the monetary obligation is the value of all property owned by the manufacturer. Only the excess of the amount of monetary obligations over the value of the debtor’s property (non-payment) could, in non-trade activities, lead to the debtor’s inability to fulfill monetary obligations.

The feudal (pre-capitalist) mode of production was replaced by the capitalist mode of production, with the establishment of which a qualitative change occurred in the essence of production (non-trade) activity.

One of the main factors in the development of capitalist production, called entrepreneurial activity in law, is credit. In addition, the economic essence of production changes under capitalism, which is usually expressed by formula (3):

D – T … P … T'– D',

(3)

where: D – money;

T – goods: means of production and labor;

P – production process;

T' – new (produced) product with added value (profit);

D' – money: previously invested (advanced) and profit.

In abbreviated form, the given formula (3) looks like this:

D – T – D'.

The indicated formula (3) allows us to note that the economic essence of the capitalist mode of production, in contrast to simple commodity production, is similar to the economic essence of trading activity37. Under the capitalist mode of production, the capitalist acts as the owner of capital (industrial capital), i.e., a sum of money that he advances into the sphere of circulation for the purpose of its return. Under this circumstance, production, like trade, begins to be based on the need to advance industrial capital, and the property of the producer (not the merchant), like the property of the merchant, begins to be divided into two types: property

, used in the process of personal consumption, including money spent for the specified purpose, and
money (industrial capital)
that the producer must advance in carrying out production activities. In such a situation, industrial capital becomes the source of payment for non-trade activities. The value of other property, including the value of goods purchased for production, is not a source of payment for producer transactions. Now, in non-trade activities, as in trade, the inability to extract advanced industrial capital from the sphere of circulation deprives the producer of a source for payment, and at the same time the possibility of timely fulfillment of monetary obligations.

Rights and obligations of the debtor

The rights and obligations of the debtor arise from the terms of the contract, transaction, from acts of state bodies and local governments, from a court decision, as a result of causing harm and from other grounds provided for by law[2].

On the part of the debtor, as well as on the part of the creditor, one or more persons may participate. If each of the parties to the contract bears an obligation in favor of the other party, then it is considered a debtor of the other party and at the same time its creditor. The debtor cannot unilaterally refuse to fulfill an obligation or change its terms, except in cases provided for by contract or law. The debtor has the right to fulfill the obligation before the deadline, unless otherwise provided by law or the terms of the obligation[7].

The debtor has the right to assign the fulfillment of the obligation to a third party if the law or the terms of the obligation do not imply that the debtor is obligated to fulfill the obligation personally. If the debtor has assigned the fulfillment of an obligation to a third party, the creditor is obliged to accept the fulfillment[7]. It is necessary to distinguish between the fulfillment of an obligation by a third party and the transfer of debt; it is for the transfer of debt that the consent of the creditor is required.

If several debtors are involved in an obligation, then each of them is obliged to fulfill the obligation in an equal share. However, if an agreement or law establishes joint liability of debtors, then the creditor has the right to demand performance both from all debtors jointly and from any of them in full or in part of the debt. In this case, the debtor who has fulfilled a joint and several obligation has the right of recourse against other debtors[7].

In case of incapacity of the creditor, his evasion from accepting execution and in some other cases, the debtor has the right to deposit the money or securities due from him to the deposit of a notary or court[7].

Contents and characteristics of the obligation

The concept and types of obligations presuppose the presence of certain characteristic features. Thus, in the theory of civil law it is customary to distinguish the following:

• An obligation is a legal relationship of a relative nature. It pits a particular debtor against a particular creditor, or a group of debtors against a group of creditors.
• The creditor or creditors have the opportunity to satisfy their own needs only through the performance of certain actions by the debtor or group of debtors.
• The state guards the satisfactory implementation of responsibilities through the use of compulsory measures. These include penalties, penalties, fines, and so on.
• In order to ensure full protection of violated rights, claims are filed.

As in legal relations of other types, the content of obligations is the duties and rights of the relevant entities (that is, creditors and debtors).

Insolvent debtor

According to Russian legislation, an insolvent debtor is recognized[3]:

• a citizen or individual entrepreneur who is unable to satisfy the claims of creditors for monetary obligations and (or) fulfill the obligation to make mandatory payments, if the corresponding obligations and (or) obligations are not fulfilled by him within three months from the date on which they should have been fulfilled, and if the amount of his obligations exceeds the value of his property;
• a legal entity that is unable to satisfy the claims of creditors for monetary obligations and (or) fulfill the obligation to make mandatory payments, if the corresponding obligations and (or) obligations are not fulfilled by it within three months from the date on which they should have been fulfilled.

The relevance of this problem in international law

It is very high and is based, in one case or another, on controversial issues. Let's consider situations in which uncertainties usually arise:

• Clearly locating the place where the damage occurred.
• Determining the place where the consequences of the negative influence occurred.
• Limits of possible tort.
• The victim chooses the right that seems most favorable to him.
• Possibility of compensation for moral damage.
• The problem of jurisdiction of such claims.

As for the last point, problems arise here related to claims of citizens against legal entities. Errors often arise from the jurisdiction of these cases. While they may apply to both a court of general jurisdiction and an arbitration court. At the same time, courts often refer such cases to each other, citing different provisions of the law.

Notes

1. Debtor // Great Soviet Encyclopedia: [in 30 volumes] / ch. ed. A. M. Prokhorov. — 3rd ed. - M.: Soviet Encyclopedia, 1969-1978.
2. ↑ 12
   Chapter 21 Part 1 of the Civil Code of the Russian Federation of November 30, 1994 No. 51-FZ
3. ↑ 12
   Articles 2 and 3 of the Federal Law of the Russian Federation of October 26, 2006 No. 127-FZ “On Insolvency (Bankruptcy)”
4. New Economic Dictionary / Edited by A. N. Azriliyan
   . - M.: Institute of New Economics, 2006. - 1088 p. — 4000 copies. — ISBN 5-89378-014-0.
5. Federal Law of October 2, 2007 No. 229-FZ (as amended on December 28, 2016) “On Enforcement Proceedings” (Russian). consultant.ru.
6. Federal Law of July 3, 2016 N 230-FZ “On the protection of the rights and legitimate interests of individuals when carrying out activities to repay overdue debts and on amendments to the Federal Law “On microfinance activities and microfinance organizations” (Russian). consultant.ru.
7. ↑ 1234
   Chapter 22 of Part 1 of the Civil Code of the Russian Federation of November 30, 1994 No. 51-FZ

Wiktionary has an entry for
"debtor"
Wiktionary has an entry for
"debtor"

Non-contractual obligations in private international law

The fulfillment of a non-contractual obligation in international law requires certain pre-existing conditions:

Violation of legality by a person in relation to the law of a given country:

• Clear evidence of harm;
• The connection between the offense and the occurrence of harm;
• The real guilt of the violator of the law.

The second aspect of the legal settlement of non-contractual obligations will be the rules of the following conflict of laws:

• Linkage to the jurisdiction of the state where the basis for the harm occurred.
• Binding to the laws of the country where the harm occurred.
• Application of the law of the country whose citizens are the victim or cause of damage.

And the third important point here is freedom of expression in relation to the chosen justice. It is valid if both parties have reached an understanding in choosing the appropriate legislation.

For example:

In an accident that occurred on the territory of the Republic of Belarus, a private car was damaged as a result of traffic violations by a truck of a Russian legal entity. The victim demanded compensation for damages from the guilty legal entity through the Russian court. However, the court, referring to an international agreement between the countries, determined on the basis of the conflict of laws rule that this dispute should be resolved on the basis of Belarusian law.

Russian courts, when considering disputes between parties from different states, are guided by the norms of international treaties, and in the absence of one, they apply conflict of laws rules of Russian legislation.

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Arbitrage practice

Despite the accuracy of definitions and rich judicial practice, specific problems often arise related to the interpretation of the nature of non-contractual obligations examined by the courts in each individual case. Let us analyze examples of legal regulation and court proceedings regarding non-contractual obligations.

Very often, the plaintiff demands compensation for damages associated with the unlawful actions of the defendant. For example, a legal entity, while carrying out certain construction and utility work, accidentally damaged the property of an ordinary citizen. This could be, for example, a garage or a fence. In this case, the court makes a ruling in favor of the plaintiff with monetary compensation for damages.

Another common occurrence is a claim for compensation for damage to health and property arising from a traffic accident. In this case, the court is obliged to assess the degree of harmful impact, the consequences for the health of the victim and the financial costs incurred in connection with the repair of the car. The decision also obliges the defendant to compensate for the damage caused.

Special types of property of the debtor

Special requirements apply to strategically important and social facilities. Thus, the administrator of the bankruptcy estate must ensure their safety and intended use. If the new owner decides to provide paid services in relation to this property, then their tariffs must be carried out within the framework of the law. These features should be taken into account when including objects in the bankruptcy estate.

The property register includes:

• Fixed assets: durable items with a life of at least a year: technical equipment, buildings, structures, tools, transport.
• Working capital are tangible assets used for up to one year within one production cycle.
• Intangible assets are patents, marks, brands, software, intellectual property that have generated profit.
• Debts of third parties for unpaid services.

Legal aspects

The procedure for the formation and assessment of the bankruptcy estate is prescribed in Federal Law No. 127 “On the insolvency of the borrower.” The register includes all property recorded on the balance sheet of the enterprise and identified during production. Very often, seized objects undergo changes. Some of them can be returned to the debtor, and the second can be included in the bankruptcy estate, as it can be used to pay off the debt. The exception includes objects withdrawn from civil circulation, property rights, social funds, and rented premises. The absence of ownership rights to objects must be confirmed by documents.

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Explanations

The invalidity of a claim is based primarily on the nullity of the transactions from which the right of claim arises. An exception is liability for order papers. According to Article 146, the endorser is responsible not only for the existence, but also for the implementation of the right. It is important to distinguish between the invalidity of the claim itself and the agreement on its transfer. If the former is insignificant, the latter remains valid. According to Article 390, the invalidity of the claim serves as a basis for holding the original creditor liable. To interpret the term within the framework of a monetary obligation, you should refer to Article 827 (clause 2). According to the norm, such a claim, acting as the subject of an assignment, is considered valid if the client has the right to assign it. Moreover, at the time of assignment, he knows the circumstances under which the debtor may not fulfill it. The invalidity of claims should not be equated with indisputability. The validity of the agreement does not depend on the nature of the transferred obligation. This is due to the fact that failure to repay the debt entails liability of the original creditor. In this case, the contract cannot be declared invalid. The admissibility of the assignment does not depend on whether the demand is indisputable and whether the possibility of implementation by a counteroffer for the assignor to fulfill his obligations to the debtor is conditional.

Homogeneous obligations are...

Homogeneous obligations should be understood as obligations that provide for the transfer to the creditor of things and/or rights defined by generic characteristics, such as monetary obligations or obligations to transfer uncertificated securities of a certain category. This definition was given by the Plenum of the Supreme Court of the Russian Federation in paragraph 3 of the resolution “On some issues of application of the general provisions of the Civil Code of the Russian Federation on obligations and their fulfillment” dated November 22, 2016 No. 54 (hereinafter referred to as Resolution No. 54).

This concept is used when creditors enter into an agreement on the procedure for satisfying their claims against the debtor. The legislator determined the conditions for concluding such an agreement:

• the presence of claims of different creditors to one debtor;
• homogeneity of such obligations.

Such an agreement is mandatory for creditors, but does not change the procedure for carrying out bankruptcy and the order of satisfaction of creditors' claims provided for by bankruptcy legislation (clause 4 of Resolution No. 54).

The concept of obligations in civil law and their classifications are not purely theoretical constructs.
The attribution of an obligation to a specific type directly affects its legal regulation and the application of certain norms of the Civil Code to such a legal relationship. You can find more complete information on the topic in ConsultantPlus. Full and free access to the system for 2 days.

Bargaining

The entire bankruptcy estate presented in the register in bankruptcy must be valued at market value. For this purpose, appraisers may be involved, whose services are paid by creditors. Appraised objects go up for auction. The procedure for selling property is described in detail in Art. 84 Federal Law. The sale of the debtor's property from the bankruptcy estate is carried out at open auction. The manager is obliged to publish information about bankruptcy and information about property in the media 30 days before the auction. The starting price is fixed at the market value. The location of the auction is determined by the general meeting of creditors.

Due to large encumbrances, in practice no one buys the asset for the first three months. At each subsequent auction the price is reduced by 10%. The auction itself takes place with an increase in price. According to statistics, property is often sold in the 3-4th procedure with a discount of 30-40%.

The new bill proposes an alternative tendering procedure. The property will have an initial selling price and a minimum price. If no applications are received at the first stage, the price will be reduced by 10% or to the minimum level. This will significantly increase the chances of conducting the first successful auction and reduce the cost of financing the bankruptcy estate. At the same time, there is a danger that large creditors will abuse their influence if there is loyalty on the part of the manager. In addition, the Ministry of Economic Development reduces the time frame for holding auctions to 40 days from the date of the decision to hold them. Here are some changes that may occur in the code in the near future.

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Subdivision of obligations by subject composition

According to the subject of fulfillment, obligations are divided into the following:

1. With multiple subjects, such as:
   shared (Article 321 of the Civil Code), when debtors are liable in shares established by law or contract;
2. solidary (Article 322 of the Civil Code), when your claims can be submitted to any of the debtors;
3. subsidiary (Article 399 of the Civil Code), when an additional debtor can be contacted if the main debtor is unable to fulfill his obligations independently.
4. Participation of third parties. One can distinguish recourse obligations (clause 2 of Article 325 of the Civil Code), when the main debt was paid by a third party, or, conversely, obligations in favor of other persons (Article 430 of the Civil Code, for example, a beneficiary in an insurance contract).
5. Change of persons, when one of the counterparties transfers its powers to another person. Examples include:
   cession (Article 382 of the Civil Code);
6. subrogation (Article 965 of the Civil Code);
7. transfer of debt (Article 391 of the Civil Code).

Article 382 of the Civil Code of the Russian Federation with comments

The above provisions determine the general procedure for regulating the assignment. It should be noted that during the reform of the Civil Code, the systematization of Chapter. 24. In particular, paragraph 1 currently contains “General provisions”, “Assignment”, “Transfer of rights on the basis of law”. The formation of such a structure is based on the pandect principle of codification. It involves identifying separately general provisions and norms regulating special cases. This approach assumes that the former apply to all situations that are not regulated by special rules. For example, in the special provisions dealing with assignment by law, there are no rules regarding notification of the debtor. The procedure and consequences of notification, as well as its absence, are thus subject to the general procedure.

Reimbursement of expenses

According to Art. 382 of the Civil Code of the Russian Federation, the assignment of rights presupposes the obligations of creditors to the debtor. In particular, the norm stipulates that these entities reimburse the individual for expenses caused by the transaction jointly and severally. This rule applies if it was committed without obtaining consent from the debtor. Other compensation rules may be prescribed by securities laws.