Legal support of a consumer credit cooperative in the process of its member insolvency
Our client, the consumer credit cooperative Union Finance, one of Russia’s leading companies in its segment, concluded a loan agreement featuring a debt limit with one of its members – a legal entity that was subsequently declared insolvent (bankrupt). As a result of the member’s bankruptcy, not only were the funds under the loan agreement not fully repaid, but our client was hit with a claim seeking the return to the bankruptcy estate of the debtor’s previously-discharged tranches and the interest it had paid for the use of the borrowed funds. The receiver challenged the payments made in favor of Union Finance as void transactions on the part of the debtor amounting to the former’s preferential treatment ahead of other creditors. Kachkin & Partners’ attorneys prepared a legal position that wholly negated the arguments mounted by the receiver – despite the fact that case law in this area of dispute had yet to fully form. As a result, the receiver abandoned its stated claims, and the interests of our client were thoroughly upheld.