12 Sep 2022 15:13

Moscow court upholds declaration of bankruptcy submitted by Google's Russian subsidiary

MOSCOW. Sept 12 (Interfax) - Moscow's Arbitration Court on Monday upheld the declaration of bankruptcy submitted by Google's Russian subsidiary.

The court has also ordered a monitoring procedure for the company, an Interfax correspondent reported from the courtroom.

Court hearings into the bankruptcy lawsuit on its merits have been scheduled for March 13, 2023.

The court involved the Federal Financial Monitoring Service (Rosfinmonitoring) as a third party in the proceedings.

A representative of the debtor explained that the company filed for bankruptcy because the size of the creditors' demands is currently over 19 billion rubles whereas the company's assets are worth only about 3.5 billion rubles.

Commercial organizations, a taxation authority, and company employees are among the creditors.

According to the representative of the debtor, the main issue is that all nine Citibank accounts of the company are frozen, and the funds transferred to them are also being frozen.

"We have repeatedly tried to challenge the seizure of accounts in courts, but to no avail," the representative said.

"We request that the court initiate the monitoring procedure in relation to the company," the representative said, adding that the company has means to fund the bankruptcy procedure.

Google LLC filed for bankruptcy on June 16. The motion was taken up by the court on June 23.

A Google spokesperson confirmed earlier to Interfax that the company's Russian entity has filed for bankruptcy, adding that the freeze of Google Russia's bank account has made it impossible for the Russian office to continue functioning and to fulfill its financial obligations.

Google LLC posted a notice on Russia's official registry Fedresurs on May 18 that it intends to apply to the arbitration court to declare its own bankruptcy. The Russian company said then that it "has been anticipating its own bankruptcy and the impossibility of executing monetary obligations" since March 22, 2022.

The Google press service said at the time that the freeze on the Google Russia bank account had made the operation of the Russian office impossible, including retaining employees and making the payroll of the Russian staff, settlements with suppliers and contractors, and fulfillment of other financial liabilities.

However, free Google services, such as Google Search, YouTube, Gmail, Maps, and Google Play, will remain accessible in Russia, it said.

Google's Russian legal entity was registered in 2005. At the end of 2021, it posted revenue of 134.3 billion rubles and a net loss of 26 billion rubles, the company's first loss since 2009.

Russian regulators are acting through administrative and court response measures to get Google to remove banned content from its services, to localize the database of Russian users in Russia, and to lift restrictions on Russian media outlets' YouTube channels.