Domestic courts can consider cases of the bankruptcy of foreign companies – this is the decision that has been made by the Supreme Court of Russia. It is designed to protect clients of offshore companies created by compatriots, but the prospects for considering such cases remain very vague. As a general principle, any legal entity is primarily subject to the laws of the country in which it is registered. However, the situation of offshore companies is special: it is obvious to everyone that the Cypriot, Maltese, Bahamian or other “registration” is a fiction, and in reality the activities are carried out far from these islands.
Kseniya Malmygina, an Associate in the Transactions and Corporate Law Practice at Nordic Star, said that the destiny of a foreign legal entity and its assets will not be subordinated to the Russian court, since the Russian court can apply bankruptcy rules only to property on the territory of our country.