Developer’s bankruptcy of doubtful benefit for equity holders / Commentary / ASN-Info
When a developer finds himself in a difficult situation, work on the construction site is slow and deadlines are missed. Hotheads among equity holders often suggest that the developer declare bankruptcy and they get “their share” when dividing his property. However, experts call bankruptcy the most extreme measure, appropriate only when it is clear that the house will not be built.
Arina Dovzhenko, Specialist Partner and Head of the Real Estate and Construction practice at Borenius Russia, commented to the ASN-Info publication on why it is ineffective for a developer to go into bankruptcy in the interests of an equity holder. She also offered equity holders dealing with unscrupulous developers mechanisms to protect their rights.