Subordination reduces a claim’s payment priority. It does not automatically apply to every shareholder loan or intra-group claim. The Russian Supreme Court’s guidance calls for an assessment of the obligation and how it arose. A separate issue is compensatory financing: support by a controlling person during financial distress instead of recourse to the insolvency procedure prescribed by law.
Separate the existence of debt from its ranking
It is useful to prepare two sets of records. The first establishes whether money was actually advanced or goods delivered. The second explains why funding was provided and the debtor’s condition. A signed agreement does not tell the entire payment history, and a general reference to connected companies cannot replace an assessment of the transaction.
Map the parties and funding sources: who transferred the money, how they obtained it and where it went next. Check the map against bank statements and accounting entries. If funds passed through several companies, retain records for every link so that an independent reader can follow the flow.
Reconstruct the funding terms
Prepare the original agreement, amendments, schedules, security documents and repayment correspondence. Compare the terms with actual conduct: were extensions granted, payment arrangements changed or repayment demanded? Do not rely only on the latest agreement if terms changed materially during the relationship.
To establish the financial position, gather reports and management data at key decision dates, details of overdue obligations and expected receipts discussed at the time. Distinguish contemporaneous records from documents prepared later. This chronology helps explain the commercial rationale and reveal discrepancies between the parties’ accounts and the records.
Prepare responses to objections
Match each argument by creditors or the insolvency practitioner with specific evidence. Establish whether the dispute concerns the existence of the debt, its amount or its ranking. Each question needs its own response. The aim is a coherent evidential record explaining the transaction, without replacing missing documents with a general description of intra-group relationships.