‘Bankruptcy proceedings usually presuppose registering all the remaining assets of a company and selling them by auction,’ explains Roman Rechkin, Legal Issues Director of Intellect-C Legal Security Agency relating to HydroSpetsStroy Ltd. (general contractor of Noviy Grad, the local developer).

‘People who invested money in their apartment block are now in desperate straits. If the building has not been commissioned yet, they can’t claim any property right over their apartment since the latter just does not exist. It’s also difficult to make the insolvent company give you your money back, since debts normally increase the auction price of the company’s assets. The best these investors can hope for is minimal compensation,’ Mr. Rechkin observes.

HydroSpetsStroy Ltd. was declared insolvent by the Court of Arbitration and will now have to undergo bankruptcy proceedings with Olga Rushitskaya as their acting trustee in bankruptcy. Ms Rushitskaya has to hold a meeting of the company’s creditors and decide upon a self-regulating organization whose members would then appoint the trustee in bankruptcy themselves.

The company owes its creditors over 55 million RUR.