- Which financial (not tax or labour) short-term compensation schemes for immediate losses due to social distancing measures have been implemented? For which industries/sizes of business?
- Which medium-to long-term stabilisation measures are in place in your jurisdiction?
- Which measures (Guarantees, Loans, Equity Injections, etc.) are available?
- Have these mid- to long-term stabilisation measures already been notified with EU or other antitrust bodies?
- Which prerequisites are necessary to qualify for a programme?
- Are there any major reasons that may inhibit an applicant from successfully applying for a stabilisation measure?
- In an international context, are subsidiaries and branches of foreign parent/holding companies eligible to apply? For EU-States: Also for non-EU-third countries?
- Do your country’s stabilisation schemes foresee restrictions on use of cash/other restrictions?
- How are insolvency application deadlines handled in times of Corona?
- How far have local insolvency/restructuring laws been changed/eased which might have an impact on international businesses?
- Are there any particular Corona-related rules on cross-border insolvencies and restructurings in place in your country?
- Which restructuring/insolvency measures instead of a wind down are available for Corona-related restructurings of entities with an international design or background in your country?
jurisdiction
1. Which financial (not tax or labour) short-term compensation schemes for immediate losses due to social distancing measures have been implemented? For which industries/sizes of business?
Loan repayment moratorium
Under Federal Law No. 106-FZ dated 3 April 2020, the following measures were introduced:
a) Moratorium of loan repayment for affected small- and medium-sized enterprises (SMEs) for up to six (6) months.
Until 30 September 2020 SMEs will be entitled to ask for a moratorium of loan repayment (or reduction of repayment amounts) for a period of up to six (6) months (the “Repayment Moratorium Period”). During the Repayment Moratorium Period no penalties, early repayment or enforcement of security can be claimed by the lender. After the end of the Repayment Moratorium Period, the borrower will be obliged to repay all principal and accrued interest for the Repayment Moratorium Period in accordance with the terms of the loan agreement effective before the Repayment Moratorium Period.
To benefit from the Repayment Moratorium, a legal entity must:
- be a SME - there are a number of criteria to qualify, which include, inter alia:
- having a profit of no more than RUB 2 billion (approx. USD 26 million) per year
- restrictions on the number of employees
- participating in the technology sector.
The new measures rely on the definition of an SME already existing in law:
- be working in a sector mostly affected by COVID-19. These sectors are defined by the Government and include, inter alia, aviation, transport, culture and entertainment, sports, HORECA, repair and cleaning services, etc.
- have taken a loan before 3 April 2020.
b) Moratorium of loan repayment for individuals and entrepreneurs whose income decreased by 30%
Rules similar to the rules described above are applicable to consumer and individual entrepreneurs’ loans, with the difference that the interest accrued during the Repayment Moratorium Period is calculated as two-thirds of average market interest for consumer loans (as calculated and published by the Central Bank of Russia (the “CBR”)) (not applicable to the loans secured by mortgage).
To benefit from the Repayment Moratorium, individuals (consumers or individual entrepreneurs) must:
- prove that their income decreased by 30% (in comparison with their average monthly income in 2019)
- have taken a loan before 3 April 2020.
c) Refinancing of loans – measures taken by the Central Bank of Russia
The Central Bank of Russia (CBR) announced a programme for the refinancing of loans granted to SMEs. The programme includes establishing a reduced interest rate for SMEs (no more than 8.5% p.a.) and subsidising the banks so they can provide further loans to SMEs. (RUB 500 billion (approx. USD 6 billion) is allocated). In turn, Russian banks are entitled not to downgrade the financial status of SME borrowers until 30 September 2020.
d) Rent deferral and rent reduction
A rent deferral is granted starting from the date of the adoption of a decision on the introduction of a high-alert regime or state of emergency in the territory of the Russian Federation until 1 October 2020, but only to tenants from the sectors most affected by COVID-19 (i.e. aviation, transport, culture and entertainment, sports, HORECA, repair and cleaning services, etc.). The rent due for the deferral period in 2020 (rent arrears) shall be paid in equal instalments in the amount not exceeding half of the monthly rent not more than once per month not earlier than 1 January 2021 and not later than 1 January 2023 excluding any liability for undue rent payments.
In addition, for SME tenants lease payments are freezed, but only in relation to leases of state or municipal property.
Upon the mutual agreement of tenants and landlords the rent for the deferral period can be reduced due to inability to use the leased property.
It is recommended that regions of the Russian Federation provide landlords who have granted a deferment to tenants with property tax benefits and land plot rent reductions.
2. Which medium-to long-term stabilisation measures are in place in your jurisdiction?
Same measures as above.
3. Which measures (Guarantees, Loans, Equity Injections, etc.) are available?
Same measures as above.
4. Have these mid- to long-term stabilisation measures already been notified with EU or other antitrust bodies?
Other.
Comments
N/A
5. Which prerequisites are necessary to qualify for a programme?
Overall, the measures mostly relate to SMEs and/or companies working in sectors mostly affected by COVID-19 – please see details in other sections.
6. Are there any major reasons that may inhibit an applicant from successfully applying for a stabilisation measure?
Other.
Comments
Overall, the measures mostly relate to SMEs and/or companies working in sectors mostly affected by COVID-19 – please see details in other sections.
7. In an international context, are subsidiaries and branches of foreign parent/holding companies eligible to apply? For EU-States: Also for non-EU-third countries?
Other.
Comments
Only Russian entities can be recognised as SMEs.
Moreover, SMEs cannot have more than 49% of their stake belonging to foreign shareholders. The exception to this rule is when:
- a foreign shareholder’s annual income does not exceed RUB 2 billion (approx. USD 26 million)
- the number of employees of a foreign shareholder does not exceed 250, and
- a foreign shareholder is not an “offshore company” as determined in accordance with the Russian Tax Code.
8. Do your country’s stabilisation schemes foresee restrictions on use of cash/other restrictions?
No.
Comments
No.
9. How are insolvency application deadlines handled in times of Corona?
On 1 April 2020 Federal Law No. 98-FZ came into force to entitle the Russian Government to impose a moratorium on the initiation of bankruptcy proceedings “to ensure stability in the economy in exceptional cases (i.e. natural and technogenic emergencies, significant changes in the rouble exchange rate and other similar circumstances)”.
On 4 April 2020 the Russian Government introduced the moratorium for six (6) months.
The moratorium concerns a wide number of companies that have a strategic importance for the Russian economy, as well as about 1.3 million businesses in other sectors including aviation, transport, culture and entertainment, sports, HORECA, repair and cleaning services, etc.
During the moratorium the courts will have to return applications for declaring a debtor bankrupt to their creditors. Debtors who are subject to the moratorium are also exempt from the obligation to file for their own bankruptcy.
10. How far have local insolvency/restructuring laws been changed/eased which might have an impact on international businesses?
The vast number of ongoing court proceedings (including insolvency ones) are being put on hold. However, there is no general restriction on hearing bankruptcy cases.
A number of restrictions are imposed on companies under moratorium, and the most significant ones include the following:
- participants or shareholders are not allowed to withdraw from the company, and the debtor is not allowed to buy out the placed shares or participatory interests
- it is not permitted to terminate the debtor’s obligations by set-off if it disrupts the priority of creditors’ claims
- it is not permitted to pay dividends or to make distributions on participatory interests, and to distribute profits between the debtor’s participants
- penalties and other financial sanctions for the non-performance of monetary obligations and mandatory payments do not accrue
- enforcement over pledged assets is not allowed, whether through court or out-of-court procedures
- enforcement proceedings on pecuniary sanctions for claims that arose before the introduction of the moratorium are suspended (but seizure of the debtor’s property and other restrictions on the disposal of the debtor’s property remain in force).
The law also provides for an extremely strict measure aimed at preventing stripping companies falling under the moratorium of their assets.
If a bankruptcy case is still initiated against a company within three (3) months after the end of the moratorium, all its transactions related to the transfer of property and the acceptance of obligations made during the moratorium period will be considered null and void.
This measure does not apply to transactions made in the ordinary course of business if the price of the property transferred under this transaction does not exceed 1% of the value of the company’s assets.
11. Are there any particular Corona-related rules on cross-border insolvencies and restructurings in place in your country?
No.
Comments
No.
12. Which restructuring/insolvency measures instead of a wind down are available for Corona-related restructurings of entities with an international design or background in your country?
N/A
