Press centre News

On April 2, 2015, the VEGAS LEX law firm organized a workshop for major power distributors and grid operators on Dealing with Payments Arrears in the Energy Sector: Legal Methodology and Tax Accounting.

The opening remarks were delivered by a special guest, Rustam Gaifutdinov, Deputy Chairman of the Board of the Non-commercial Partnership of Guarantee Suppliers and Energy Supply Companies, who presented the most recent legislative initiatives to improve the payment discipline in the energy supply and building management sphere.

Head of the Energy Projects Practice Evgeniy Rodin explained how a company’s system of dealing with accounts receivable could be adapted to current economic realities. The expert gave some practical advice on how to improve in and out-of-court practices of dealing with such receivables depending on the type of debtor. He especially focused on the legal ways of restricting further increase of the debt, such as limiting the electricity supplies or terminating the supply agreement, as well as the legal ways of improving the payments discipline fr om the so-called ‘non-disconnectable’ consumers.

Alexander Vyazovik, who heads the bankruptcy division at VEGAS LEX, spoke about ways to deal with debtors who have gone bankrupt and described situations wh ere the creditor is advised to initiate the debtor’s bankruptcy. The participants then discussed various strategies that creditors can opt for in regard to the bankruptcy case, their advantages and disadvantages. Mr. Vyazovik gave some advice about ways to retrieve the money if the debtor has no property. The audience appeared keenly interested in risks of debt redemption at a time when the debtor is on the verge of bankruptcy because these payments can later be invalidated and may have to be returned to the bankrupt company.

Yury Ivanov, projects manager of Tax Practice, thoroughly discussed the tax aspects of handling receivables and covered issues that can significantly affect the choice of strategy for dealing with them. He discussed the possibility of accounting for such receivables as expenditures when calculating the profit tax through identifying them as bad debt, through assignment of receivables, or through creating a doubtful debt reserve. In some cases, excessive pre-court and in-court dispute resolution and claims activity can lead to a negative economic result for the creditor. In fact, the acknowledgement of this debt by the debtor and the initiation of litigation, as well as the inclusion in the list if creditors can make it impossible to identify these receivables as expenditures for the profit tax for several years ahead. This would seriously affect the creditor if they finally fail to collect the debt. Mr. Ivanov discussed the taxation of concession of claims (cession), an operation that can cause problems with the tax authorities, and described the court practice of disputes over unjustified tax benefit obtained via cession.

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For more information on VEGAS LEX’s services in the power generation and distribution sectors, please go here.

For more information on VEGAS LEX’s tax-related services, please go here.

For more information on VEGAS LEX’s experience in supporting insolvency and bankruptcy projects, please go here.