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On February 17, 2015, the VEGAS LEX law firm organized a workshop on government contracts for design and construction, on restructuring contract relations and handling disputes with the client. The event took place in Moscow and was supported by the Russian Guild of Property Managers and Developers.

Government investments usually dwindle in times of economic crises, part of development projects become suspended, some of the existing government construction contracts are reviewed and bankruptcies are initiated.Igor Chumachenko, VEGAS LEX Partner and Head of the Real Estate, Land & Construction Practice, spoke at the workshop about the recent ‘anti-crisis’ changes in the government procurement legislation, which allow adjustments of state or municipal contract terms with both parties’ agreement, deferrals on the payment of damages (fines or penalties), or writing them off. He also covered some aspects of court practice, in particular of disputes between the parties to a development contract.

Alexander Trushkov, Senior Associate of the VL Dispute Resolution Practice, delivered a report on the types and specifics of disputes over bank guarantees issued as security for the obligations under government development contracts.

The participants specifically discussed some aspects of the contractor's potential insolvency (bankruptcy). The discussion was led by Alexander Vyazovik, who heads the bankruptcy division at VEGAS LEX, and covered ways to minimize legal risks posed by the newly-introduced contractor bankruptcy option and the risks of the government contract termination due to the contractor’s insolvency or replacement (due to confirmed bankruptcy).

How bankruptcy proceedings might affect the fulfillment of specific contract obligations was one issue that greatly interested the audience, as well as the mechanism of pulling out of the bankruptcy procedure.

The event was attended by a number of major companies, including state contractors such as Mostotrest, DSK Avtoban, the Administration of Civil Airports state unitary enterprise, Mil Moscow Helicopter Plant, the MORTON group of companies and others.

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For more information on VEGAS LEX’s services in development and construction, please click here.