Legal Status of Quasi-Security Property in Bankruptcy: Comparative Study

This study is devoted to the legal status of ‘quasi-security’ property in bankruptcy. Acts of international unification, as well as international conventions, offer different approaches to determining the status of ‘quasi-security’ property. Foreign countries also have different approaches to regulating ‘quasi-security’: some of them recognize it as an independent way to secure obligations (for example, England), others convert ‘quasi-security’ into pledge (for example, Germany), the remaining ones use a unitary approach to regulating both ‘quasi-security’ and pledge only in bankruptcy (for example, Austria). In Russia, literally none of the bankruptcy proceedings participants can be sure how the court will qualify ‘quasi-security’: the court may either consider such a transaction valid and include or exclude security property from the insolvency estate of the bankrupt person (depending on which party to the secured transaction has become bankrupt), or consider that the transaction aimed to secure the creditor with a title to the debtor’s property is bypassing the law or is a sham transaction, covering pledge, so it must be converted into pledge, and the parties of the transaction should be considered as the pledgor and the pledgee. As a result of this study, it seems fair to use a unitary approach to ‘quasi-security’ only for bankruptcy purposes, since during insolvency proceedings all the negative consequences of free use of quasi-security’ become most evident.