Quasi-security obligations: international practice, regulation and development prospects in Russia. Comfort letter: its status and legal force in foreign legislation Comfort letter from the guarantor bank

<1>The preparation of this article was supported by the Central European University (CEU) Special and Extension Programs. The author's views expressed in this article do not necessarily reflect the views of CEU.

Burkova A., candidate of legal sciences.

Sometimes in international practice there is a document called a comfort letter (in English - “comfort letter”). What it is? What is its status under foreign law?

A comfort letter is a letter issued by an organization or person that expresses support for another person.

In international practice, there are usually several most common cases of providing comfort letters:

provision of letters of comfort by the parent organization in relation to its subsidiary to the creditor of the subsidiary. In these letters, the parent organization expresses its agreement that the subsidiary company receives financing;
provision of comfort letter by audit firms for the purpose of allotment of shares/bonds by their clients. In such letters, audit firms confirm the financial performance of the companies since the last audited statements were provided, and also confirm that there have been no significant financial changes in the company's activities compared to how such activities are described in the prospectus;
provision of comfort letters by governments, for example, confirming the government's agreement that certain funds will be provided to public/state-owned companies or that the government will provide all necessary licenses to a person for a certain project.

Comfort letters from the government are often used for project financing. This is due to the fact that, unlike conventional lending, where all risks associated with lending are, as a rule, fully borne by the borrower, when organizing project financing, risks are distributed among several persons, including between the borrower, lender and other project participants . Thus, the management of political risk when implementing project financing, the size of which is usually significant and which may affect the strategic interests of the state, is most appropriate to entrust to state bodies or the government, involving them in the project. In this case, the state undertakes certain guarantees to create special conditions for a certain period of time that will facilitate the implementation of the project.

As another example of using a comfort letter abroad, we can cite comfort letters to supervisory authorities. For example, in some countries (UK, France, etc.) it is standard practice to provide comfort letters to the supervisory authorities of the relevant countries when the main shareholder of a bank with foreign capital changes.

What legal force do comfort letters have?

In fact, the legal effect of a letter of comfort depends on its provisions and the requirements of the law or jurisprudence of the jurisdiction in which the letter of comfort was issued or the dispute is pending.

As a rule, the force of a letter of comfort is lower than the legal force of a guarantee or surety. Letters of comfort are usually issued in cases where the guarantor is not prepared to provide a legally valid guarantee/surety. For example, due to the fact that the guarantee would violate the guarantor's standards or internal provisions or agreements, or the guarantor does not want the corresponding obligations to be placed on its balance sheet, or because the guarantor believes that such security is sufficient in this particular case.

In these cases, essentially comfort letters are used where some semblance of a guarantee is considered better than just nothing. They are not suitable for creditors who may sue the guarantors in the future.

Interestingly, the approach that comfortable writing is not always an obligation prevails in Anglo-Saxon law (UK and US). However, in France and Germany, comfort letters are very often recognized as valid obligations. It is also believed that if the letter of comfort states the law and choice of court, this means that the intention of the parties was to create a legally enforceable document, in which case the letter of comfort can be equated to a surety or guarantee.

The conditions for comfortable writing in commercial practice usually cover the following main points:

confirmation that the person providing the comfort letter is aware of the financing.

The parent company says it is aware of the proposed loan and approves it. Such confirmation is intended to eliminate subsequent objections from the parent company that the subsidiary acted independently and therefore bears all responsibility independently;

obligation not to reduce its share in the organization.

The parent company agrees that it will not reduce its share of the subsidiary's share capital until the loan is repaid. Sometimes it is also stated that if the parent company ceases to own the borrowing subsidiary or reduces its interest in it, the parent company will provide a guarantee to the lender for the obligations of the subsidiary;

the degree of support that creditors require.

May vary greatly from case to case. For example, the parent company, in accordance with the letter of comfort, confirms that it will not receive money from the subsidiary if this results in the subsidiary being unable to fulfill its obligations to the creditor. However, with this form of support, it should be borne in mind that the parent company agrees not to withdraw money from the subsidiary, but it does not agree to provide money and pay for its subsidiary to the creditor if the subsidiary fails to fulfill its obligations.

Support can also be expressed in the form of subsidies: the parent company agrees to provide the subsidiary with all the necessary funds so that the subsidiary fulfills its financial obligations to creditors.

The degree of support is usually expressed in terms of intention - "in our intentions" or "according to our policy." The expression of such an intention in Anglo-Saxon law does not provide any guarantee for the future, since it is believed that intentions may change.

Indicative in this sense is the dispute in the case of "Kleinwort Benson Ltd v Malaysia Mining Corpn." According to the circumstances of the case, the plaintiff agreed to provide funds to the defendant's subsidiary. The defendant was asked to provide a guarantee to secure the subsidiary's loan obligations but refused to do so. In exchange, the respondent provided the applicant with a comfort letter which stated the following: "It is our policy to ensure that the subsidiary's business is conducted in such a manner that it can fulfill its obligations to you." Then the market crashed and the subsidiary was declared bankrupt. The applicant attempted to obtain funds from the defendant by relying on a comfort letter from the parent organization. The applicant considered that since the letter was a commercial document, it was presumed that such a document was provided to create a legally valid obligation. The court rejected the claim, noting that the wording of the comfort letter essentially represents simply an excerpt from the internal documents (policies) of the defendant, therefore the comfort letter cannot be considered as a promise not to change such internal rules in the future, and therefore cannot be considered as a legally valid obligation . The Court emphasized that the question of whether a contract creates legally binding obligations depends on the circumstances of each particular case. In Kleinwort Benson Ltd v Malaysia Mining Corpn it was important that the parties were on equal footing, that the respondent expressly refused to provide a valid guarantee and that the applicant instead agreed to accept a letter of comfort on the basis that the interest on the loan would be higher than it was would have been if the defendant had provided a guarantee.

SOME LEGAL CONCEPTS NOT KNOWN IN RUSSIAN LAW

A.Yu. BURKOVA

Russian legislation is still in a state of development. Every year it is enriched with new institutions and concepts. However, some of these concepts have not yet come to Russia or are insufficiently developed. These concepts exist both in corporate law and in civil, financial or banking law of other states.

Escrow accounts

An escrow account is an account from which money (property) is transferred upon the occurrence of certain circumstances or the fulfillment of certain obligations. Escrow accounts are sometimes called escrow accounts or security deposit accounts (you may also see other terms).
The scheme works as follows. One party deposits money (property) with the escrow agent. An escrow agent holds the escrow deposit until a specified event occurs or an obligation is satisfied. The beneficiary has the opportunity to receive funds (property) only if pre-agreed conditions are met. All these conditions are negotiated when transferring money or other property to the escrow agent. If the beneficiary fails to fulfill the terms of the agreement, the escrow agent, upon the arrival of the agreed period, returns the deposit amount to the person who transferred the funds (property).
A person who acts as an escrow agent serves as a fiduciary with equal responsibilities to all parties who have an interest in the property placed in escrow. Therefore, independent organizations that have no interest in the transaction act as escrow agents. In this regard, for example, an escrow agent cannot support only one of the parties, or provide (offer) assistance to one of the parties. Instead, the escrow agent, if acting as a lawyer, must refer the parties to another lawyer who can assist them in resolving the dispute.
Escrow agent services are often provided by financial organizations, lawyers, and notaries. In some states, the activities of escrow agents are subject to mandatory licensing. It is interesting that in the West, due to the prevalence of the escrow agent institution, there is a specialization. Often, specialized escrow agents are trained in areas such as real estate, insurance, taxes, and inheritance. The need for such specialization is due to the fact that the functions of escrow agents are very closely related to the study of rights and circumstances, the occurrence of which obliges escrow agents to transfer funds (property) to beneficiaries.
The main responsibility of the escrow agent is to ensure the security of the transferred property in escrow. If it is money, it must be deposited in a special bank account that is separate from the agents' accounts.

Letter of Intent

Sometimes in commercial relationships, before concluding the main contract, the parties sign a letter of intent. This document may also be called a memorandum of intent, letter of intent, or other names.
A letter of intent usually serves to outline the general terms under which the parties will be willing to enter into a particular transaction.
Although in some cases the letter of intent may be binding on the parties, more often the parties use the letter of intent as a document that consolidates the results of the parties' negotiations on the future terms of the transaction.
Indeed, it is convenient to have a short document that outlines the main parameters of a future transaction, and based on it, prepare a detailed contract. At the same time, the parties know that if something goes wrong, the party can always withdraw from this transaction before signing the main agreement.
A letter of intent is sometimes used as evidence to potential investors that negotiations between the parties have actually taken place and that the parties have reached a certain understanding of the terms on which they are willing to cooperate, and these terms are specified in the letter of intent.

Comfort letter

A comfort letter is a letter issued by an organization or person that expresses support for another person.
In international practice, there are usually several most common cases of providing comfort letters:
provision of letters of comfort by the parent organization in relation to its subsidiary to the creditor of the subsidiary. In these letters, the parent organization expresses its agreement that the subsidiary company receives financing;
submission of a comfort letter by audit firms for the purpose of placing shares (bonds) by their clients. In such letters, audit firms confirm the financial performance of the companies since the last audited statements were provided, and also confirm that there have been no significant financial changes in the company's activities compared to how such activities are described in the prospectus;
submission of letters of comfort by governments, for example confirming the government's agreement that certain funds be provided to public (state-owned) companies, or that the government will provide all necessary licenses to a person for a certain project.
Comfort letters from the government are often used for project financing. This is due to the fact that, unlike conventional lending, where all risks associated with lending are, as a rule, fully borne by the borrower, when organizing project financing, risks are distributed among several persons, including between the borrower, lender and other project participants . Thus, the management of political risk when implementing project financing, the size of which is usually significant and which may affect the strategic interests of the state, is most appropriate to entrust to state bodies or the government, involving them in the project. In this case, the state undertakes to guarantee the creation of special conditions for a certain period of time to facilitate the implementation of the project.
As another example of using a comfort letter abroad, we can cite comfort letters to supervisory authorities. For example, in some countries (UK, France, etc.) it is standard practice to submit comfort letters to the supervisory authorities of the relevant countries when the main shareholder of a bank with foreign capital changes.
The legal effect of a letter of comfort depends on its provisions and the requirements of the law or judicial practice of the jurisdiction in which the letter of comfort was issued or the dispute is pending.
As a rule, the force of a letter of comfort is lower than the legal force of a guarantee or surety. Letters of comfort are usually issued in cases where the guarantor is not prepared to provide a legally valid guarantee (surety), for example, due to the fact that the guarantee would violate the guarantor's regulations, or internal regulations or agreements, or the guarantor does not want the corresponding obligations to be placed on it balance, or because the guarantor believes that such security is sufficient in this case.
In these cases, comfort letters are used where some semblance of a guarantee is considered better than just nothing. They are not suitable for creditors who may sue the guarantors in the future.

Warranties and indemnity obligations

Often, when concluding a financial or commercial transaction, the creditor (bank, seller, etc.) wants to obtain security for the fulfillment of the obligations of the debtor (borrower, buyer, etc.) to him.
One way to ensure the fulfillment of obligations is to obtain a guarantee from a third party. Under the terms of this guarantee, a third party - the guarantor - undertakes to answer to the creditor in the event of default by the debtor.
For example, under English law there are several types of security obligations from third parties, including through:
guarantees in which a third party guarantees the fulfillment of the debtor’s obligation to the creditor;
obligation of compensation (indemnity), in which a third party agrees to compensate the creditor for his losses resulting from entering into a transaction with the debtor.
The main difference between a guarantee and an obligation to indemnify is that the obligation to indemnify is the main primary obligation, while the guarantee is a secondary obligation, somewhat reminiscent of an accessory obligation under Russian law.

Venture funding

In the current global economy, access to finance for small and medium-sized enterprises is an important prerequisite for strengthening the competitiveness of the European market.
The benefits of small businesses are that they have the potential to create new jobs and technology.
Raising capital is one of the conditions for successful business development. Own funds and raising funds through the issuance of securities are not always sufficient and possible for small businesses, especially in the early stages of their development.
However, many investors do not provide financing to small companies due to the fact that the effort and costs that will be necessary to arrange financing for a small business will be the same as for ordinary enterprises, and the expected profit from such financing may not cover the calculations of financiers their risks.
In these cases, these small companies typically look for a venture capitalist who can provide sufficient funds to enable the small businesses to enter and grow in their respective markets.

Non-compete clauses

A non-compete clause means that one of the parties to the contractual documentation agrees not to engage in similar activities with the other party. Such a clause is valid throughout the validity of the contract between the parties and, in certain cases, may exist after the termination of the parties’ relationship.
The purpose of a non-compete clause is to prevent a counterparty from engaging in competing activities, starting its own business, or gaining an advantage as a result of access to confidential information about that person's operations and trade secrets.
Sometimes non-compete clauses are structured as exclusivity clauses, such as the exclusive right to deal with a particular supplier or the exclusive right to be a distributor of a particular product.
Non-compete clauses have both advantages and disadvantages.
Among the advantages, as noted above, is the limitation of opportunities for counterparties to abuse the information they receive or access to the market.
Among the disadvantages is the ability, through non-compete clauses, to limit the development and activities of the individual concerned, for example, limiting the ability of a former employee to conduct business in accordance with his abilities or limiting the ability of an agent to represent several principals in the same territory.
Non-compete clauses can also negatively impact the status of competition in a given market. Therefore, in many countries, the law provides that if non-competition clauses directly violate competition provisions, the relevant clauses are automatically invalidated.

Subordination

Subordination provisions - provisions under which the creditor (subordinated or junior creditor) agrees that payment of its obligations occurs only after the claims of the ordinary (senior) creditor are satisfied.
The parties, concluding agreements that contain provisions on subordination, pursue several goals:
a senior creditor, for example a bank, may provide financing by stipulating that the claims of insiders of the debtor, such as the parent company or a major shareholder, must be subordinated to the claims of the bank;
subordinated debt may be created to increase capital for regulatory purposes. Central banks in some countries allow commercial banks to include subordinated loans in capital to calculate compliance with banks' banking regulations;
subordinated debt allows you to increase the debtor's financing. Some creditors are willing to subordinate their claims so that the debtor receives more loans and other financing to develop the debtor’s business;
a subordinated loan in some cases helps the borrower survive without going through bankruptcy, financial recovery or liquidation procedures. Sometimes the shareholders of a company or the largest suppliers may subordinate their claims against the debtor in order to induce other creditors not to require the debtor to fulfill its obligations to them or to postpone obligations so that the borrower can restore its solvency.

Representations and Warranties

Representations, warranties and undertakings are a common element of many contracts drafted in Anglo-American countries. Recently, this part of the agreement has also appeared in agreements drawn up by Russian banks. Representations and warranties indicate certain facts at the time the contract is signed (representations and warranties), while covenants define the rules that the parties must follow or comply with during the contract (covenants, undertakings).
Representations and guarantees are confirmations given by the borrower on certain issues that are material to the bank's decision to provide funds under loan agreements. These confirmations relate to the legal, commercial and financial status of the borrower.
Representations and warranties can serve several functions:
indirect receipt of information from the borrower before concluding financing agreements, when either the borrower does not want to provide certain information, or the lender does not have time to conduct the necessary verification of the borrower and his activities. During the negotiation of financing agreements, the lender inserts certain representations and warranties into the draft agreements and expects that the borrower will either request that the representations and warranties be modified or disclose relevant information about its activities to the lender;
representations and warranties serve as a checkpoint, failure to comply with which may suspend the provision of tranches or funds. In this case, the contract stipulates that on each date of provision of funds, representations and warranties must be reliable. This means that if the guarantees or representations are not reliable, the bank is not obliged to provide funds or their next tranche to the borrower. The unreliability of representations and warranties may give rise to an event of non-fulfillment of an obligation if the contract expressly provides that it arises if any of the representations and warranties is unreliable.
It should be noted that representations and warranties can only protect the rights of the creditor if the creditor relies on them and has no knowledge to the contrary. If the creditor knew for sure that the representations and warranties provided were not reliable, these provisions are likely to not protect the rights of the creditor, since by using them the creditor is abusing its rights.
Representations and warranties may relate to the existence of a legal entity, its legal capacity, availability of necessary permits, validity and enforceability, absence of litigation, absence of violations of law, encumbrances, etc.

Pari passu

"Pari passu" clauses can be found in most international financing agreements.
Usually the text of "pari passu" looks like this:
The debtor's obligations under this agreement are at least "pari passu" (have the same priority as the debtor's other unsecured obligations).
In international transactions, such provisions are inserted in order to protect the creditor from the risk that his obligation will rank lower than that of another creditor, and that some other creditor will appear who will have priority in satisfying his claims.
The practical significance of the "pari passu" principle is not in doubt, especially in the case of the debtor's insolvency, when, depending on the priority of the creditor's claims, such claims may be fully satisfied or not fully satisfied.

"Shadows director"

"Private director" means a person who has the power to give instructions to the ordinary directors of a company and the ordinary directors are subject to those instructions.
Any person can act as a “hidden director”: an individual or an organization. However, more often than not, the “hidden director” is the company's shareholders, who can issue binding instructions to the ordinary directors on an ongoing basis. If the directors do not comply with these instructions, the shareholders may replace them with other persons.
Thus, a “hidden director” is a person who can have a real influence on the company’s activities. Therefore, its activities are regulated and controlled. It is subject to certain standards.

Nominee Director

A nominee director is an individual or legal entity appointed as a director in a company, who, however, performs his functions formally. In reality, the management of the company is in the hands of the person who appointed the nominee director. This person gives instructions to the nominee director: what to do, what transactions to make, what documents to sign.
Typically, the person who appoints and controls a nominee director in a company is one of the shareholders (founders) of the company.
Such shareholders (founders) or their representatives can, in principle, themselves act as a director of the company.
However, they are reluctant to act in this capacity for several reasons, for example because:
they want anonymity;
or because otherwise they will be recognized as tax residents in a given country and will be forced to pay taxes;
or because shareholders (founders) or their representatives do not want to prepare and execute all the necessary corporate documents, etc. and entrust this work to a professional who acts as a nominee director. Nominee directors fill out and prepare all documents on a professional basis and can more quickly resolve formal procedures in the company.
The nominee director also conducts annual corporate meetings, which again relieves shareholders (founders) and their representatives from completing these formalities.
Due to these reasons, shareholders (founders) of companies sometimes opt for nominee directors.
In these cases, it is common practice for local persons to be appointed as directors.
We note that while a few years ago nominee directors in certain jurisdictions could act solely on the instructions of the persons who appointed them, the situation has now changed dramatically due to ongoing international measures to combat illegal money laundering.
More and more states are adopting the following concept: even if nominee directors are appointed, they must act in the best interests of the company. In other words, the status of nominee directors is equal to the status of ordinary corporate directors.

Independent director

Although the phrase “independent directors” has already appeared in the legislation on joint stock companies in Russia, their activities and cases of use are not sufficiently regulated.
In international practice, the purposes of using independent directors can be different:
ensure that boards of directors include directors who can act independently without conflicts of interest;
attract high-level specialists to the company's work who can give valuable advice for the development of companies;
ensure a reasonable balance of interests of the company, its shareholders and other persons;
introduce best corporate governance practices into the work of boards of directors.
Typically, independent directors in international practice include persons who meet the following parameters:
are not employees of the company over the past several years or employees of affiliates;
are not affiliated with the company’s largest suppliers, clients, its consultants or auditors, etc.;
do not own any shares or shares in the company where they are independent directors.
An independent director is expected to improve management efficiency, which has a positive effect on the company's image and makes a tangible contribution to increasing shareholder value.
An independent director ensures equal treatment of the interests of all shareholders of the company. He is ready to defend independent decisions and oppose decisions of management and the board of directors that could adversely affect the company's operations and its financial position. For these purposes, an independent director must be aware of the company’s activities and its specifics.
Within the framework of his powers, an independent director can help protect the legitimate interests of the company and its shareholders from illegal actions of third parties.
An independent director may be necessary to establish international contacts and increase confidence in the company or to improve the corporate governance system.
An independent director who has worked in similar enterprises before his appointment to the company can help the company formulate its development strategy and provide valuable advice for its development.

Some of these concepts may be of interest to the Russian market. Therefore, they may appear in Russia in the future.

Bibliography

1. Richard Calnan. Taking Security: Law and Practice. Bristol: Jordans Publishing Limited, 2006.
2. Philip R. Wood. Project Finance, Securitisations, Subordinated Debt. 2nd ed. London: Sweet & Maxwell, 2007.

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Writing a great letter of recommendation for a company in a formal style can be challenging.
You can greatly alleviate this problem for your guarantor if you yourself present him with a layout of a letter of recommendation.

In this case, you can initially present the content of the document in the right direction.

2. In the first paragraph, the guarantor explains how long he has been working with you. Briefly describes your type of activity and job responsibilities. Here you can write in a few words about the company itself.

3. In the next paragraph, it is necessary to give a more specific description of your professional and career growth throughout your time working in the company, list all the main achievements, and focus on the most important positive qualities from the point of view of the guarantor. Then the guarantor’s impression of joint activities with you.

To summarize what was written above, it is important to describe the personal qualities and positive character traits of a person. Express your opinion about what responsibilities and in what position he can bring the greatest benefit to the organization.

Letter No. 1:

OJSC [company name] is our partner in the field (area of activity). During the period of cooperation, [name of organization] confirmed its highest professional status, activity and competence in performing assigned tasks.

All tasks are completed on time, within strictly defined deadlines and with excellent quality. The company's employees perform their duties efficiently.

We are pleased with the work of [company name] and are ready to recommend this company as a responsible and reliable partner.

[Your name]

Sample letter No. 2:

The company [name of organization], working in (year) year for [name of organization], carried out work on [name of work] and established itself as a highly qualified, executive company.

The work was carried out efficiently and on time. There were no complaints against the company during the work.

[Your name]

Sample letter No. 3:

[name of organization] has been a partner of [name of organization] for [number] years. For such a long time, [name of organization] has established itself as a stable and reliable partner, providing high efficiency, reliability and a flexible approach to the Customer’s needs, never exceeding deadlines.

[Your name]

Sample letter No. 4:

By this letter I confirm that [name of organization] has experience in cooperation with [name of organization] in the field of [field of activity]. During the cooperation, company representatives showed a creative approach, high professionalism and efficiency in carrying out the designated tasks.

We confirm that the services of [organization name] correspond to a highly professional profile.

[Your name]

Sample letter No. 5:

Our cooperation with the company [name of organization] has continued since [year]. During this period, the company [name of organization] has established itself as a reliable business partner and sustainable enterprise.

Thanks to the main principle of the company's work - the formation of partnerships with clients based on professionalism and mutual cooperation, it, in our opinion, occupies a stable position in the field of [field of activity].

Sample letter No. 6:

With this letter, the organization [name of organization] informs that during the period of cooperation with [name of organization], this company has managed to establish itself as a reliable and professional partner.

The main distinguishing feature of the work of [name of organization] is the high level of organization and efficiency of the organization’s employees, the readiness to quickly respond to changing circumstances.

Based on the above, the company [name of organization] would like to note the high potential of OJSC [name of organization], focus on prosperity and further successful development.

[Your name]

Letter #7:

During the period of work with [name of organization], the company’s employees have proven themselves to be positive. Their work meets the specified level, is performed with high quality and strictly on time. I would like to note the efficient work of the specialists and the efficiency of completing tasks, and their attentive attitude towards the Customer.

[Your name]

Sample letter No. 8:

By this letter, we, [name of organization], confirm that [name of organization] is our long-term and reliable partner.

[name of organization] has been successfully and actively working since [date], providing a full range of services in this area.

During this period, we were provided with services at the highest professional level. The professionalism of [organization name] employees ensures a decent quality of services provided.

Based on the above, [name of organization] characterizes [name of organization] as a reliable and professional partner in the field of [field of activity] services.

Criminal lawyers are specialists in handling criminal cases of various sizes. These are lawyers whose calling is to provide vital services to people who have been found to be criminals by the courts. The main intention of obtaining the service of a criminal defense attorney is that the attorney will argue positions regarding numerous laws and sections designed to serve people opposing criminal cases. Criminal lawyers are classified into various classifications and sections.

The modern business world has revolutionized living standards and people are traveling far from home. With businesses crossing borders, people are forced to travel to many places and have to stay there for a period of time or on a permanent basis. In this regard, the need for comfortable and luxurious hotels has recently increased. With proper and modern amenities and prompt service for a comfortable stay, the hotel has become a worthy choice for business professionals.

Ideally, if you are traveling, you should purchase travel insurance before you leave. However, it is understandable that for some people this may not be the case. There are many travelers who ask if they can purchase travel insurance after departure. This can happen when your travel insurance has expired because you overstayed in a certain location, your policy has expired, or you simply forgot to take out travel insurance.

Many football players are well aware of how markets and odds generally work. However, for those new to football betting, there may be some challenges when trying to choose the best odds on their chosen markets. Such players should find free betting tips on individual sites that offer these services. It is important for new players to properly understand the different markets and how they work. Free betting tips will only benefit players if they know the basics of football betting. Football fans need to understand the typical markets before betting their money on any games.

A. BURKOVA,

Candidate of Legal Sciences

Quasi-security obligations:

international practice, regulation and development prospects in Russia

Securing obligations is of great importance when concluding any transaction. The need for collateral is due to the fact that there is a certain period of time when the lender provided some property to the borrower, and the borrower did not return it or repay it. During this period, the lender intends to provide itself with compensation for losses if the borrower fails to fulfill the main obligation. Thus, interim measures serve as guarantees of the fulfillment of the obligations of the parties.

All methods of securing obligations, although they differ in the degree of impact on the debtor and in the methods of achieving the main goal of interim measures, have one common goal - to encourage the debtor to fulfill the obligation properly. The debtor’s behavior will largely depend on the creditor’s optimal choice of how to secure the obligation.

The main methods of securing obligations are described in Art. 329 of the Civil Code of the Russian Federation. Fulfillment of obligations can be ensured by a penalty, a pledge, retention of the debtor's property, a surety, a bank guarantee, a deposit and other methods provided for by law or contract. Thus, the parties can independently establish in the contract the method of securing the obligation, if it does not contradict the requirements of Russian legislation. In addition, there are methods that play the role of securing obligations, but are not always classified as security methods. Such methods are sometimes called quasi-collateral.

This article will consider ways to secure obligations that can be considered quasi-security, their place in international practice and the possibilities and prospects for their development in Russia.

Quasi-collateral includes a letter of comfort, escrow account, negative clause, subordination agreements, guarantees and representations, direct write-off, warehouse receipt and others.

Comfort letter

International practice

Comfortable Letter is a legal institute known in international practice; is a letter issued by an organization or person that expresses support for another person. In international practice, there are usually several most common cases of providing comfort letters:

The parent organization in relation to its subsidiary organization to the creditor of the subsidiary organization. In these letters, the parent organization expresses its agreement that the subsidiary company receives financing;

The legal effect of a letter of comfort depends on its provisions and the requirements of the law or judicial practice of the jurisdiction in which the letter of comfort was issued or the dispute is pending.

As a rule, the force of a letter of comfort is lower than the legal force of a guarantee or surety. Letters of comfort are usually issued when the guarantor is not prepared to provide a legally valid guarantee or surety, for example, due to the fact that the guarantee would violate the guarantor's standards, the internal provisions of the contract, or the guarantor does not want the obligations to be placed on its balance sheet, or because it believes that such provision is sufficient.

Use in Russia

In Russia, comfort letters are rarely used, most often in connection with international transactions where the support of the Russian government is required.

For example, according to the Protocol of Agreement between the Government of the Russian Federation and the Government of the French Republic on financing in the oil sector (Moscow, February 15, 1996), the Russian government agreed to provide support for each funded project by signing letters of comfort. In accordance with the Decree of the Government of Russia dated 01.01.01 No. 826 “On the signing of a Memorandum between the Russian Federation and the Republic of Austria on financial support for joint projects”, the Government recognized that it was advisable to attract commercial loans guaranteed by the Federal Minister of Finance of the Republic of Austria, under comfort letters of the Government Russian Federation.

Thus, in Russian legislation there is no definition and regulation of comfort letters. Such comfort letters are issued extremely rarely, mainly by sovereign entities to provide support for international projects. The legal validity of comfort letters will depend on their wording. Letters of comfort can also be used in commercial practice, but they will most likely be classified as limited sureties.

Escrow accounts

International practice

An escrow account is an account from which money or property is transferred upon the occurrence or fulfillment of certain obligations. Escrow accounts are sometimes called “escrow” or “security deposit” accounts (other definitions may also be found).

In an escrow account arrangement, one party deposits money or property with the escrow agent. The latter holds the escrow deposit until the occurrence of a certain event or fulfillment of obligations. The beneficiary has the opportunity to receive funds or property only if pre-agreed conditions are met. All these conditions are agreed upon when transferring money or other property to the escrow agent. If the beneficiary of the escrow fails to fulfill the terms of the agreement, upon the arrival of the agreed period, the deposit amount is returned to the person who transferred the funds or property.

Since one of the requirements for escrow agents is trust in him on both sides of the transaction, escrow agent services are often provided by financial organizations, lawyers, and notaries.

The escrow agent performs the following functions:

Prepares the necessary instructions from both parties, receives the necessary documents and funds;

Determines interest, taxes, etc.;

Checks receipts, if provided;

Closes the transaction when all obligations of the parties under the contract are fulfilled;

Makes payments in the amount authorized by the parties;

Provides both parties with a report on the transfer of funds;

Informs the parties about the progress of the transaction.

However, the escrow agent's primary responsibility is to ensure the security of the transferred property in escrow. If it is money, it must be deposited in a special bank account that is separate from the agents' accounts.

The next person in the escrow account relationship is the beneficiary. The beneficiary may be the seller. This person transfers the signed escrow agreements to the agent, provides other required documents, such as insurance policies, guarantees for the property being sold. The beneficiary's interest is to delegate the handling of the transaction to a specialist so that every condition of the transaction is met and the person who pays does not receive ownership of the property until such person has paid the purchase price or fulfilled the obligations to secure the transaction.

The person who transfers the funds can be the buyer. The obligations of such a person include the transfer of funds to the escrow agent, notification to the escrow agent of the conditions under which the second party can receive funds, and the performance of other obligations under the agreement. If the creditor is still involved on the part of this person, then it is he who transfers the funds to the escrow agent. The person providing the funds has an interest in ensuring that the transaction is carried out in accordance with his instructions and that the funds are not paid to the beneficiary until the transaction is completed.

When you use an escrow agent, there is usually an agreement that describes conditions that must be satisfied before money is released to the beneficiary. The agreement sets out the terms of the transaction in respect of which payment is made.

The agreement usually contains the following information:

Names and addresses of all parties;

The amount of money transferred to escrow;

The name and address of the bank where the escrow funds will be stored, as well as the name and number of the bank account;

Information about whether the escrow agent is required to use only accounts that earn interest and how interest received on monies is distributed;

Responsibilities of the escrow agent, including in the event that the terms of the escrow agreement are not met;

Instructing the escrow agent to make any payments, such as taxes, from the transferred amount;

Conditions that must occur or be satisfied before the escrow agent for the release of funds;

Time to fulfill these conditions;

The form of presentation of the document, written or oral, for the release of funds, the form in which this document should be prepared;

In what form and with what frequency are reports from the escrow agent provided;

The law that governs the contract and judicial jurisdiction.

Since the escrow agent acts in accordance with instructions and cannot exceed them, clear and correct establishment of such instructions is of great importance.

Escrow accounts are used in different industries. Very often they are used when transferring real estate. For example, a person who is abroad wishes to sell his property in another country. If the exact mechanism of sale is agreed upon and the documents are certified, an escrow agreement can be concluded under which money is paid to the seller upon execution of documents in the proper form.

Escrow accounts can also be used in trade transactions when a shipment is due to arrive. Instead of a letter of credit, the money is placed in an escrow account and when the seller has fulfilled the contractual obligations to the seller's satisfaction, which may include an independent appraisal by the server, the money is paid to the seller.

Other examples of the use of escrow are settlements in case of personal injury or when paying in court cases, agreements when dividing property in family matters, during the wholesale sale of business assets, when escrow ensures the proper payment of taxes and debts.

Escrow is also used for consumer transactions, for example, when making advances on cars, paying for participation in health clubs and other clubs.

Use in Russia

Currently, the issue of escrow accounts is not directly regulated in Russian law. However, legislation makes it impossible to open such accounts for the following reasons:

The legislation of some countries provides ample opportunities for the formulation and conclusion of subordination agreements. However, the main methods of subordination include:

Full subordination, under which no payments are made to the subordinated creditor until the senior claims are fully satisfied;

Incomplete subordination, under which payments within the limits specified in the agreement can be paid to a junior creditor until the occurrence of a certain circumstance, for example, the inability of the debtor to comply with certain standards, or its insolvency (bankruptcy), which serve as the basis for the commencement of the provisions on subordination (the event of bankruptcy may be formulated as voluntary or forced bankruptcy, filing a bankruptcy petition, appointment of an arbitration manager, recognition of final bankruptcy).

In case of incomplete subordination, it is possible either to transfer money directly to the junior creditor, or to agree that all dividends received and other distributions received by him will be held in a trust in favor of the senior creditor to satisfy the senior claim or (more rarely) the junior creditor’s obligation to pay to the senior creditor an amount equal to what he received as compensation for his junior claim.

Money held in a trust for the benefit of a senior creditor is not included in the bankruptcy estate of a junior creditor in the latter's bankruptcy unless it can be shown that the junior creditor specifically subordinated its claims in order to remove money from the bankruptcy estate for the benefit of some senior creditor. In this case, such subordination may be declared invalid.

Use in Russia

In Russia there is legislation that regulates subordination issues, but it only applies to subordinated loans from credit institutions.

Issues of subordinated loans are regulated by the following main regulatory documents: Federal Law dated January 1, 2001 No. 40-FZ “On the insolvency (bankruptcy) of credit organizations”, Federal Law dated July 10, 2002 No. 86-FZ “On the Central Bank of the Russian Federation ( Bank of Russia)", Regulations of the Central Bank of Russia dated February 10, 2003 No. 215-P "On the methodology for determining the own funds (capital) of credit institutions", Instruction of the operational nature of the Central Bank dated 01.01.01 No. 114-T "On termination of a subordinated agreement loan."

The purpose of the subordinated loan, which is issued to Russian banks, is enshrined in Regulation No. 215-P. In accordance with this provision, funds received under subordinated loans may be included in the bank's additional capital. It, in turn, is an integral part of such an indicator as “the amount of equity (capital)” of credit institutions. The value/change of this indicator may be the basis for taking measures to prevent the bankruptcy of a credit organization; it affects the internal control of reservations carried out by the bank, the possibility of increasing the authorized capital of the credit organization, etc. Thus, the inclusion of a subordinated loan in the bank’s additional capital is significant an advantage for the bank, as it entails an increase in the “value of equity (capital)” indicator.

In connection with the advantages provided by a subordinated loan, there are certain requirements of the Central Bank for its execution, the content of the agreement, and its approval by the Central Bank of Russia.

These subordinated loan provisions apply in the event of bank bankruptcy. According to Art. 50.39 of the Federal Law of 01.01.01 No. 40-FZ “On the insolvency (bankruptcy) of credit organizations”, in the event of bankruptcy of a credit organization, the requirements for a subordinated loan are satisfied after full satisfaction of the claims of all other creditors.

As stated above, the possibility of subordinating claims only applies to financing that banks receive. Russian legislation does not contain the possibility of subordinating the claims of some creditors to other creditors in other cases. If such subordination is enshrined in the agreement, it will contradict the priority of satisfying claims in bankruptcy established in Federal Law No. 127-FZ of January 1, 2001 “On Insolvency (Bankruptcy).” In accordance with this Law, the priority of satisfying claims in bankruptcy cannot be changed by agreement of the parties.

What alternative legal mechanisms to the subordination agreement that allow the establishment of priorities of requirements exist in Russian legislation? One of such mechanisms is the procedure for dividing the company's authorized capital into preferred and ordinary shares. Article 23 of Federal Law No. 208-FZ dated January 1, 2001 “On Joint Stock Companies” states: “The remaining property of the liquidated company after completion of settlements with creditors is distributed by the liquidation commission among shareholders in the following order:

First of all, payments are made on shares that must be redeemed in accordance with Article 75 of this Federal Law;

Secondly, payments are made of accrued but not paid dividends on preferred shares and the liquidation value determined by the company's charter on preferred shares;

Thirdly, the property of the liquidated company is distributed among shareholders - owners of ordinary shares and all types of preferred shares.”

Thus, when receiving dividends and liquidation value, shareholders holding preferred shares have an advantage over shareholders holding ordinary shares.

Another way subordination arises is the creation of a requirement that has priority under the law, for example, securing the main obligation with a pledge of property. In accordance with Art. 134 of Federal Law No. 127-FZ of 01.01.01 “On Insolvency (Bankruptcy)”, claims secured by a pledge are satisfied preferentially: “... the claims of creditors for obligations secured by a pledge of the debtor’s property are satisfied at the expense of the value of the collateral primarily before other creditors, with the exception of obligations to creditors of the first and second priority, the rights of claim for which arose before the conclusion of the relevant pledge agreement.”

Thus, Russian legislation limits the possibility of subordination of claims by the parties.

Warranties and Representations

International practice

Representations, warranties and undertakings are a common element of all contracts that are drawn up in Anglo-American countries. Recently, this part of the agreement has also appeared in agreements drawn up by Russian banks. Representations and warranties indicate facts at the time the contract is signed ( representations and warranties), and obligations define the rules that the parties must follow or perform during the duration of the contract ( covenants, undertakings).

Representations and guarantees are confirmations given by the borrower on certain issues that are material for the bank to make a decision to provide funds under loan agreements. These confirmations relate to the legal, commercial and financial status of the borrower.

Representations and warranties can serve several functions, for example, indirectly obtaining information from a borrower prior to entering into financing agreements when either the borrower is unwilling to provide certain information or the lender does not have time to conduct the necessary due diligence on the borrower and its activities. When negotiating financing agreements, the lender includes certain representations and warranties in the draft agreements and expects the borrower to either request that the representations and warranties be modified or disclose its activities to the lender. Another function of representations and warranties is that they serve as a checkpoint, failure to comply with which may suspend the disbursement of tranches or funds. In this case, the contract stipulates that on each date of provision of funds, representations and warranties must be reliable. This means that if the guarantees or representations are unreliable, the bank is not obliged to provide funds or the next tranche of them to the borrower. Finally, the unreliability of representations and warranties may give rise to a default if the contract provides that it will arise if any of the representations and warranties are unreliable.

However, representations and warranties can protect the rights of the creditor only if he relies on them and has no information to the contrary. If the creditor knew for sure that the representations and warranties provided were false, these provisions will not protect the creditor's rights, since by using them the creditor is abusing his rights.

The Bank may require the borrower to provide the following guarantees and representations:

Existence of a legal entity: the bank usually requires confirmation that the borrower is created and operates in accordance with the laws of the Russian Federation or any other state;

Legal capacity: the borrower has all the rights and powers necessary to carry out its business activities;

Permits: the borrower has received all necessary internal permits and approvals, all necessary permissions from authorized bodies or organizations in order to sign agreements with the bank and exercise rights and fulfill obligations thereunder;

Validity and enforceability: the borrower confirms that the agreements that he has entered into with the bank are valid obligations of the borrower, comply with the law and can be enforced in accordance with their terms;

Litigation: the borrower confirms to the bank that at the time of signing the agreements there are no legal proceedings and no plans to conduct them;

No violation of law: the borrower certifies to the bank that it is not in violation of any law, regulation, judgment, instruction, order, contract or obligation to which it or any of its assets are subject;

Encumbrances: the borrower assures the bank that there are no encumbrances on all or part of the borrower's assets, except for encumbrances permitted by the agreement;

Default: the borrower assures the bank that no event of default has occurred or is continuing;

Tax debt: the borrower confirms to the bank that he has no overdue debt for taxes, fees and similar obligatory payments;

Information: the borrower confirms to the bank that all information provided by the borrower to the bank is reliable;

Other types of assurances: the possibility of recognition and enforcement of foreign court decisions in the courts of the debtor’s location; no need to pay duties and other payments, or to perform certain formalities when concluding and fulfilling the terms of the contract; timely submission of the borrower’s financial reports, the reliability of such reports; lack of immunity of the borrower or his assets; compliance with environmental legislation requirements.

Sometimes the borrower requires the lender to make warranties and representations conditional on the materiality of the violations. This is to ensure that warranties and representations are not confused with technical failures that do not have any real impact on the lender's risk. A typical materiality clause is a material harm clause, such as that there is no litigation that could adversely affect the borrower.

The point at which the representations and warranties apply is important. Representations and warranties may apply to:

Moment of conclusion of the contract;

The date of the application for the provision of the tranche and the date of provision of the tranche to the borrower;

The start date of each interest period;

Each day of the contract, however, this is rarely used since the lender cannot verify compliance with the representations and warranties for each day anyway.

Use in Russia

There are several theories that explain and justify the legal validity of representations and warranties under Russian law. Despite this, there is a risk that, in the absence of clarification in the contract itself, the nature of representations and warranties may be considered as having a declaratory nature and not subject to protection.

Undoubtedly, with judicial support, representations and warranties could serve as quasi-security for the interests of the creditor, who cannot always check his counterparty with due care.

Direct write-off

International practice

Direct debit can also serve as quasi-collateral. In particular, direct write-off ensures the interests of the counterparty in the event of the second party’s refusal to fulfill its obligations. In this case, the creditor has the right to demand that the bank in which the debtor's accounts are opened write off funds from the debtor's account without obtaining any additional consent of the debtor. Typically, an agreement to write off funds from the debtor's account is concluded at the same time as the loan agreement, and makes the emergence of the creditor's right to demand the write-off of funds dependent on the debtor's default under the loan agreement.

Use in Russia

Direct write-off under Russian law can be implemented on the basis of Art. 847 and 854 of the Civil Code of the Russian Federation. In accordance with Art. 847 of the Civil Code of the Russian Federation, “the client may instruct the bank to write off funds from the account at the request of third parties, including those related to the client’s fulfillment of his obligations to these persons.”

According to Art. 854 of the Civil Code of the Russian Federation, “without the client’s order, debiting funds on the account is permitted by a court decision, as well as in cases established by law or provided for by an agreement between the bank and the client.”

Thus, direct debiting of funds from the account occurs on the basis of contractual relations that exist between the bank and the client. More detailed regulation of the procedure for direct debiting of funds is contained in the Regulations of the Central Bank of Russia dated October 3, 2002 No. 2-P “On non-cash payments in the Russian Federation.” In accordance with Ch. 11 of this Regulation “... in a payment request for the direct debiting of funds from payers’ accounts on the basis of legislation, in the “Terms of payment” field, the recipient of funds puts “without acceptance”, and also makes a reference to the law (indicating its number, date of adoption and the corresponding article ), on the basis of which the collection is carried out. In the “Purpose of payment” field, the collector, in established cases, indicates the readings of measuring instruments and current tariffs, or makes a record of calculations based on measuring instruments and current tariffs.

In the payment request for direct debit of funds based on the agreement, in the “Terms of payment” field, the recipient of the funds indicates “without acceptance”, as well as the date, number of the main agreement and its corresponding clause providing for the right to direct debit.

Direct debiting of funds from an account in cases provided for by the main agreement is carried out by the bank if there is a condition in the bank account agreement on direct debiting of funds or on the basis of an additional agreement to the bank account agreement containing the corresponding condition. The payer is obliged to provide the servicing bank with information about the creditor (recipient of funds), who has the right to submit payment requests for debiting funds without acceptance, the name of the goods, works or services for which payments will be made, as well as about the main agreement (date, number and the corresponding clause providing for the right of direct debit).

The absence of a condition on direct debiting of funds in a bank account agreement or an additional agreement to a bank account agreement, as well as the absence of information about the creditor (recipient of funds) and other above information is grounds for the bank to refuse to pay a payment request without acceptance. This payment request is paid in accordance with the preliminary acceptance procedure with a period for acceptance of five working days.”

The possibility of direct write-off of funds reduces the risks for the creditor when financing the debtor, and therefore reduces the cost of such financing for the debtor himself.

Warehouse receipt

International practice

In international practice, a warehouse receipt is used as quasi-collateral. Warehouse receipts ensure the fulfillment of the debtor's obligations to the creditor. For example, farmers who do not immediately sell their goods after the harvest store these goods in a certain warehouse or elevator, which issues them warehouse certificates confirming the storage of the goods. Farmers can receive loans against these warehouse receipts.

The use of warehouse receipts is interesting for both parties - the debtor and the creditor, as it avoids the movement of goods.

Use in Russia

In Russia, warehouse receipts are regulated by Art. 912 of the Civil Code, which provides for the possibility of issuing a simple or double warehouse certificate. Such certificates are issued by the warehouse to confirm acceptance of the goods for storage.

A simple warehouse receipt is a document upon presentation of which a warehouse can ship goods. A double warehouse certificate consists of two parts - a warehouse certificate and a pledge certificate (warrant), which can be separated from one another.

A double warehouse receipt, each of its two parts and a simple warehouse receipt are securities. Only the holder of a simple warehouse certificate or both warehouse and pledge certificates in the case of a double warehouse certificate has the right to fully dispose of the goods stored in the warehouse. The holder of a warehouse certificate, separated from the pledge certificate, has the right to dispose of the goods, but cannot take it from the warehouse until the loan issued under the pledge certificate is repaid.

The holder of the pledge certificate, other than the holder of the warehouse receipt, has the right to pledge the goods in the amount of the loan issued under the pledge certificate and interest on it. When pledging goods, a note about this is made on the warehouse receipt.

Thus, if a simple warehouse receipt or a pledge certificate with a double warehouse receipt is transferred to the pledgee, the owner of the property, the pledgor, will not be able to remove this property from the warehouse without the consent of the pledgee - this is the goal of the pledgee. Only after the debt is repaid, the creditor returns the warehouse certificate (part of it), and the pledgor can dispose of the goods by disposing of these certificates.

Operations with warehouse receipts can be carried out by both commercial pledge companies and banks. For example, according to the letter of the Central Bank of Russia dated 01.01.01 No. 04-34-2/2395 “On simple and double warehouse receipts”, “a credit organization, taking into account the provisions of its own license issued by the Bank of Russia for banking operations, has the right to carry out simple and double warehouse receipt transactions listed in Art. 6 of the Federal Law “On Banks and Banking Activities”, without obtaining additional permits.”

When handling warehouse receipts, it is worth remembering that Russian legislation imposes formal requirements for the contents of a warehouse receipt. A document that does not meet these requirements is not a warehouse receipt.

According to Article 913 of the Civil Code of the Russian Federation:

a) in each part of the double warehouse receipt the following must be indicated identically:

The name of the legal entity or the name of the citizen from whom the goods were accepted for storage, as well as the location (place of residence) of the goods owner;

The period for which the goods are accepted for storage, if such a period is established, or an indication that the goods are accepted for storage until demand;

Date of issue of the warehouse receipt;

b) both parts of the double warehouse receipt must have identical signatures of the authorized person and the seal of the warehouse.

The double warehouse receipt must also provide space for endorsements (usually on the back of the certificate).

A simple warehouse receipt in accordance with Art. 917 of the Civil Code of the Russian Federation must contain the following information:

Name and location of the warehouse that accepted the goods for storage;

Current warehouse receipt number according to the warehouse register;

An indication that it is issued to bearer;

Name and quantity of goods accepted for storage: number of units and (or) packages and (or) measure (weight, volume) of goods;

The period for which the goods were accepted for storage, if such a period is established, or an indication that the goods were accepted for storage until demand;

The amount of remuneration for storage or the tariffs on the basis of which it is calculated, and the procedure for paying for storage;

Date of issue of the warehouse receipt.

Warehouse receipts are effectively used for ordinary collateral. However, they are more difficult to use when pledging goods in circulation, since each release of goods requires a replacement warehouse receipt. Since at the time of issuing a warehouse certificate, stored goods cannot be released without the consent of the pledge holder, warehouse certificates are used when storing goods that can be stored for a certain period of time without loss of quantitative and qualitative indicators.

An interesting question is about the procedure for registering a pledge when using warehouse receipts. In accordance with Art. 912 of the Civil Code of the Russian Federation, “goods accepted for storage under a double or simple warehouse certificate may be subject to pledge during its storage by pledging the corresponding certificate.” However, it seems that the pledge can also be formalized by an agreement on the pledge of goods, which is confirmed by the transfer of a warehouse receipt (part of it). A warehouse receipt and a pledge certificate in case of a double warehouse receipt can be transferred together or separately by endorsements. For a simple warehouse receipt, transfer of the certificate is sufficient.

If a warehouse releases goods without presenting it with the necessary certificate, it will be held liable in accordance with the law. Liability is determined by the norms of Russian civil legislation and contracts between the parties, and if such liability is not limited, the pledgee may demand compensation from the warehouse for the amount of the pledged property.

The lender may also require an insurance policy to cover risks associated with the custodian's misconduct.

Thus, warehouse receipts can be a fairly effective tool for the pledgee to control the storage of property pledged in his favor.

So, it can be noted that in international practice there is a wide range of legal means that make it possible to ensure the interests of the creditor when concluding a transaction with the debtor. Many of these legal remedies are just beginning to be put into practice in Russia. However, undoubtedly, as Russia is increasingly drawn into international circulation, certain methods of quasi-security will be increasingly used in practice in Russia. Therefore, the question of legal protection of such methods of quasi-security becomes relevant. For example, to introduce escrow accounts, legislation must be adopted that allows banks to freeze funds in an account and prohibits account owners from unilaterally closing bank accounts in cases specified in the agreement. To use subordination agreements, civil legislation must introduce such a possibility and amend bankruptcy legislation, establishing a mandatory procedure for satisfying creditors' claims.

See more details: Representations and guarantees for credit transactions // Banking Law. - 2006. - No. 3.

Article 914 of the Civil Code of the Russian Federation.

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