“Cassation: Car Can Be Excluded from Disabled Person’s Bankruptcy Estate Due to Illness” — Alsu Mukhametdinova for PRObankrotstvo
The Moscow District Commercial Court ruled that when considering bankruptcy cases of disabled individuals, their health-related needs must be taken into account, including matters concerning retention of their property.
Natalia Burtseva, who has a second-degree disability, was declared bankrupt in April 2024. She petitioned the court to exclude her 2018 Kia Soul vehicle from the bankruptcy estate, as she needs it for trips to medical facilities. The first-instance and appellate commercial courts denied the petition, finding insufficient grounds to exclude the car. Burtseva appealed these rulings to the Moscow District Commercial Court, which overturned the lower courts' decisions, noting that the debtor had presented compelling arguments about her need to retain the vehicle due to her disability and medical treatment requirements (Case No. A41-92859/2023).
Alsu Mukhametdinova, Attorney and Senior Lawyer at Prime Advice Law Offices, noted that this ruling represents a logical continuation of judicial practice development regarding property exclusion from individual bankruptcy estates, which increasingly seeks to balance creditors' and debtors' interests.
She recalled that in a similar earlier case (No. A07-35027/2022), the Russian Supreme Court sided with a second-degree disabled person, citing the Constitutional Court's position on enforcement immunity (Ruling No. 10-P of July 12, 2007), which emphasizes the need to protect individual debtors by ensuring they maintain a necessary standard of living for themselves and their dependents.
In the current case, the District Commercial Court similarly focused on the social aspect and prioritized protecting constitutionally significant values like the right to dignified life and personal development. The court noted that for property to qualify for enforcement immunity — besides the debtor's disability and need for personal transportation — the property must not be luxurious. Mukhametdinova suggested that, as with sole residences, enforcement immunity might be limited by providing the debtor with a more economical vehicle alternative instead of a "luxury" one.