On 25 March 2024 the Central Bank of the Russian Federation published an official clarification “Clarification of the Procedure of Application of the Provisions of the Decree of the President of the Russian Federation dated 5 March 2022 No. 95 “On the Temporary Procedure of Execution of Obligations to Certain Foreign Creditors”” (the “Clarification”).
According to the Presidential Decree No. 95 dated 5 March 2022 obligations under credits, loans, and financial instruments to “unfriendly” creditors in the amount exceeding RUB 10 million per calendar month should be fulfilled using a special type “C” account. To fulfill an obligation to “unfriendly” creditor in excess of RUB 10 million without crediting funds to a type “C” account, it is necessary to obtain special permission from the Central Bank of the Russian Federation – for credit and non-credit financial organizations as debtors, or from the Ministry of Finance of the Russian Federation – for other organizations.
According to the Clarification, the Bank of Russia notes that fulfillment of obligation that provides for another consideration in favor of “unfriendly” creditor by a resident debtor (e.g., set-off, compensation for release from obligation, fulfillment of obligation arising from novation) without crediting funds to a type “C” account is allowed only on the basis of permissions from the Central Bank of the Russian Federation and the Ministry of Finance of the Russian Federation.
The Bank of Russia also notes that termination of a resident debtor’s obligation to “unfriendly” creditor in other cases is allowed without obtaining such permission. We assume that other cases mean termination of an obligation without any consideration from debtor, for example, in the case of debt forgiveness.