Russian courts received their first personal bankruptcy petitions onThursday, as thecountrys first ever law permitting people todeclare themselves bankrupt entered intoforce.
Onthe eve ofthe laws arrival, experts warned that courts might be overwhelmed bya flood ofapplicants unable topay debts collected during arecent loaning boom.
Currently by11 am onThursday, 108 personal bankruptcy petitions had been submitted with theMoscow Arbitration Court, theVedomosti paper reported, pointing out acourt representative.
Thefirst cases had actually likewise been filed with arbitration courts inthe town ofTomsk, theYakutia andAltai regions inRussias Far East anda number ofother areas across thecountry, according tocourt records.
By midday we received 15 bankruptcy cases, thepress spokesperson forthe Altai Arbitration Court, Daria Kushvid, told regional news portal altapress.ru.
Thepersonal bankruptcy legislation permits Russians with atotal debt ofmore than 500,000 rubles ($7,600) andover three months ofmissed payments tofile forbankruptcy. Those with atotal financial obligation less than 500,000 rubles can likewise file if they are not able torepay their loans. Prior to Thursday, just legal entities could go bankruptdeclare bankruptcy inRussia.
Petitions can be filed either byindividuals or bytheir creditors. Early report suggested that many cases onThursday had been filed bybanks.
Forinstance, Russias biggest loan provider Sberbank took benefitbenefited ofthe law, starting bankruptcy procedures against Vladimir Kekhman, theformer owner ofJoint Fruit Company (JFC), theInterfax news firm reported. JFC was amajor banana importer toRussia till it went brokedeclared bankruptcy in2012.
Thebank estimated thedebt owed byKekhman, who is presently creative director atthe Mikhailovsky Theater inSt. Petersburg, at4.5 billion rubles ($69 million), Interfax reported, citing aSberbank agent.
VTB 24, theretail arm ofthe countrys second biggest banking group, also stated it would use thelegislation, theRBC news agency reported Thursday.
Thebanks deputy president, Anatoly Pechatnikov, informed RBC it had 143,000 clients with loans ofmore than 500,000 rubles andat least 3 months ofmissed payments, with acombined debt of87 billion rubles ($1.3 billion).
Russian banks presently hold around 1 trillion rubles ($15 billion) inoverdue customer loans, andthe creditworthiness ofclients is degrading amidst adeep economic crisis.
Earlier today theFinance Ministry estimated that Moscow courts alone would have todeal with about 4 million personal bankruptcy cases over thenext year, seriously straining thecourt system, Vedomosti reported.