Court allowed to take sole real estate as collateral – Supreme Commercial Court
MOSCOW, November 27 – RAPSI, Sergei Feklyunin. On Tuesday the Supreme Commercial Court overturned a lower court decision that had blocked businesswoman Galina Mokicheva’s insolvency administrator from transferring ownership of her only residence, a property that was used as collateral in a loan taken out by Mokicheva, a court representative told RAPSI. Mokicheva is from Kazan.
Court records indicate that Mokicheva took out a five million ruble using her three-room apartment as collateral. Mokicheva owns the apartment jointly with her husband. The loan was used to increase her liquid assets, but Mokicheva failed to repay the loan.
A district court in Kazan ordered the business woman to repay the loan and also enforced the collateral agreement with respect to her four-fifths share in the apartment. During the bankruptcy proceedings, her share was included in the bankruptcy assets and put up for tender.
Mokicheva filed an appeal with the bankruptcy administrator. Three commercial court instances found the insolvency administrator’s activity illegal and excluded the apartment from the list of bankruptcy assets since it is the only residential property of the debtor and her family and, therefore is not subject to foreclosure.
The Supreme Commercial Court overruled to the lower court decisions and cited a mortgage law that allows the enforcement of a property used as collateral regardless of whether it is the sole residence of the debtor.