Issue 3: Application of suretyship rules to relations involving a third-party pledgor

Pledges are commonplace in the Russian market because of the benefits they provide to creditors, including in the case of a pledgor's bankruptcy. A pledge can be provided by both the principal obligor under the secured obligation and by a third party. In practice, the third party is most often an owner of business, a parent company or a subsidiary. However, a peculiarity of third-party pledges is the possible application of certain rules as to suretyship that are aimed at significantly improving the position of a third-party pledgor. In this regard, it is generally accepted in practice in financial transactions to exclude the application of suretyship rules with respect to a third-party pledgor to the fullest extent permitted by law.

In Issue 3 of the Survival Guidelines for Transaction Practitioners we cover matters relating to the application of suretyship rules to relations involving a third-party pledgor.

Download Issue 3 below.

Issue 3: Application of suretyship rules to relations involving a third-party pledgor