On 9 August 2011, the Ministry of Economic Development and Trade of the Russian Federation published a draft law aimed at increasing the effectiveness of protecting first and second priority creditor rights (the "Draft Law").

Specifically, the Draft Law:

  • gives employees the right to initiate bankruptcy proceedings against an employer for delayed salary payments, as confirmed by an effective judicial act;
  • sets (i) the basis by which an employee representative may file an arbitration application in court on bankruptcy proceedings against an employer; and (ii) the conditions that entitle a court to begin bankruptcy proceedings;
  • establishes a new definition of "additional expenses of an individual creditor" as being the claims of creditor individuals for the reimbursement of expenses for (i) medical treatment; (ii) extra nourishment; (iii) medical drugs; (iv) prosthetics; (v) nursing care; (vi) health resort therapy; (vii) a special transport vehicle; and (viii) training for another profession if it is determined that the creditor (x) is in need of these types of support; and (y) is not entitled to them free-of-charge. (Such claims will have first priority upon insolvency);
  • changes the procedure for satisfying the claims of first priority creditors; and 
  • envisages the possibility of transferring to the Russian Federation the liability of a liquidated legal entity to remit corresponding payments.

Adoption of the Draft Law should create additional guarantees of employee rights.

[The Federal Draft Law "On Amending the Federal Law 'On Insolvency (Bankruptcy)' and other Legislative Acts of the Russian Federation, Specifically to Improve Protecting the Rights of Individual Creditors (First and Second Priority)" can be found at the official website of the Ministry of Economic Development and Trade of the Russian Federation: http://www.economy.gov.ru/minec/documents/vostrebdocs/doc20110809_06]