Problems of Forensic Economic Expertise in Challenging Transactions with Intellectual Property in the Bankruptcy Case of a Bank

Funtov Dmitrii Alekseevich Postgraduate Student, Department of Civil Law; Business Law; Family Law; Private International Law; Financial University under the Government of the Russian Federation 49/2 leningradsky Ave., Moscow, 125167, Russia fyntovda@mail.ru

 An analysis of arbitration practice in the framework of bank insolvency cases has shown that at the current time, challenging transactions made by the debtor bank remains relevant.

  Thus, the number of cases related to challenging the transactions of an insolvent bank, both on special and general grounds, is increasing every year, while remaining the most controversial and ambiguous direction in judicial practice.In general, the country's economy has rapid development trends, in connection with this, at the present stage, the number of transactions in respect of intellectual property rights (for example, a trademark), as well as other objects (domain name) is increasing.

These transactions are increasingly being challenged in bank insolvency cases, on the grounds specified in chapter III.1 of the Insolvency Law.

In particular, the transaction is invalidated in accordance with paragraph 1 of Article 61.2 of the Insolvency Law, provided that it was made with an unequal counter-provision. On the basis of paragraph 2 of Article 61.2 of the Insolvency Law, if the transaction caused damage to the property rights of creditors, and the counterparty at the time of the disputed transaction knew that the debtor met the signs of insolvency or had information about the insufficiency of his property, or Article 61.3 of the Insolvency Law, if the transaction with preference.

It should be noted that the specifics of transactions involving a trademark, as well as a domain name, determines the conduct of financial and economic expertise within the framework of bankruptcy proceedings. Of course, the expert's opinion is included in the body of evidence. However, it has a significant value in the adoption of a judicial act. Experts do not always draw objective conclusions due to uncertainty in a number of issues.

The main problem is the lack of regulatory legal acts that define an algorithm for conducting research for banking transactions and banking transactions. It is necessary to clearly regulate the subject, object, goals and objectives, specific expert methods of forensic economic examination for credit institutions, taking into account their specifics. Also, to develop working materials for experts and determine the requirements for the expert's professional knowledge.

The absence of a single conceptual apparatus of forensic economic expertise, the unification of theoretical knowledge into unified instructional acts, taking into account the specifics of the banking industry, as well as a gap in the classification of forensic economic expertise in legal proceedings leads to different expert opinions on one issue raised in one case.

Thus, in view of the fact that the legislative institution lags behind the development of expert science, each expert, by virtue of his knowledge and experience, executes a conclusion that has its own distinctive features, while generating a conflict in the legal field.

In modern conditions, the theory of forensic economic expertise, both in scientific and methodological doctrine, is classified by genera ^[1]. In turn, each genus has a division into species. The principle of separation depends on the nature of the economic information to be studied^[2].

The classification of economic expertise is fixed by the Order of the Ministry of Justice of the Russian Federation dated December 27, 12, No. 237 and includes two types: forensic accounting and financial and economic expertise.

A narrow classification of genera makes it possible to specifically attribute the assigned examination to a particular genus.

For example, if an expert is tasked with analyzing accounting registers in order to determine whether there is data distortion in them, then this examination can definitely be classified as forensic accounting. Other issues that, for example, set the task of conducting the financial condition of the enterprise, or analyzing individual performance indicators, relate to financial and economic expertise.   

It is worth noting that forensic accounting expertise does not have a classification according to the peculiarities of accounting in various spheres of economic activity.

 Thus, for a more detailed classification of economic expertise, it is necessary to detail, which is justified by the presence of significant features of financial and economic activities of various industries. In particular, credit institutions are characterized by a significant difference from other entities, both in the field of building business processes and accounting.

That is, it is necessary to detail, developed taking into account special regulations of the industry. For the banking industry, it is worth considering the Provisions of the Bank of Russia ^[3].

 The last step in the construction of classification is classes. However, the division into classes in the current situation remains a priority for the theorists of the Institute of Expertise. Distinguishing classes, civilists are guided by the community of knowledge that forms the basis of expertise in the framework of specific cases. So, guided by the basic principles – basic knowledge, A.R. Shlyakhov identified nine classes of forensic examinations, among which is judicial planning and economic expertise ^[4].

Most often, in practice, when considering bank insolvency cases, the expert is tasked with determining the deviation of the value of assets subject to alienation from the market value, or not. And if the answer is yes, then set by what percentage. Within the framework of this examination, ambiguities arise, and as a result, a proposal to include an independent type in the existing classification that characterizes the determination of the market value of an enterprise as an object of business.

At the same time, it should be borne in mind that market value is an economic concept. Thus, "when determining the market value of an object of valuation, the most probable price is determined at which the object of valuation can be alienated on the open market on the valuation date in a competitive environment, when the parties to the transaction act reasonably, having all the necessary information, and the value of the transaction price does not reflect any extraordinary circumstances, that is, when:

-one of the parties to the transaction is not obliged to alienate the object of evaluation, and the other party is not obliged to accept execution;

-the parties to the transaction are well aware of the subject of the transaction and act in their own interests;

-the object of evaluation is presented on the open market through a public offer, typical for similar objects of evaluation;

-the transaction price represents a reasonable remuneration for the object of evaluation and there was no coercion to make a transaction with respect to the parties to the transaction from anyone's side;

-the payment for the object of evaluation is expressed in monetary form" ^[5].

Considering the examination of a trademark and a domain name, within the framework of the classification proposed by A.R. Shlyakhov, it is logical to attribute them to intellectual property objects and to the class of engineering and technical expertise. The domain name, despite the fact that it is not an object of intellectual property, however, is as close as possible to this concept. Therefore, for both objects, the specified class should be applied, due to the fact that in order to solve problems in this area, in addition to knowledge of economics, the use of special technical skills is required ^[4].

Thus, one object can be a component of several examinations. That is, in practice, a hybrid expert opinion is in demand. In this regard, there is a need, in addition to working out the issue of each examination separately, to consider options for a mixed examination, a collegial opinion of several experts with the necessary knowledge.

That is, in order to determine the market value of a trademark, it is necessary to have special economic knowledge, since value is an exclusively economic concept, and it is not possible to conduct an examination without special economic knowledge. Without technical knowledge, it is impossible to give a reliable conclusion on the technical profile of a trademark or the technical characteristics of a domain name.

Conducting an assessment of intellectual property objects, valuing securities, property values, and other necessary knowledge in various fields. In this regard, if an expert has the necessary special knowledge in sufficient volume, then he has the opportunity to conduct a study alone, but most often the assets to be evaluated have individual properties and features that cannot be evaluated without the appropriate special knowledge. In this case, an expert with relevant special knowledge should be included in the commission, i.e. a commission examination is being created.

Thus, on the same issues, it is possible to appoint both a comprehensive and a sole expert examination, depending on the characteristics of the object being evaluated.

Based on the above, it seems relevant to introduce the concept of a comprehensive examination into circulation, which can be carried out both individually by an expert economist (if he has the necessary special knowledge) and by a commission of experts of different specialties (if there are significant features of the asset being evaluated).

Within the framework of this work, forensic evaluation examinations are of interest. In the process of considering bank bankruptcy cases, these expert opinions are appointed regularly to determine the market value of various assets, in particular intellectual property.

Referring to the norms of the current legislation, where the issue of determining the market value is indicated in the Order of the Ministry of Justice of the Russian Federation No. 237. It should be noted that the order indicates: automotive technical expertise, construction and technical, commodity research.

However, there is no examination of intellectual property objects in this list, and accordingly it is not determined in which kind of forensic examinations to include it.

Thus, in modern conditions, the question of domain names as objects of law remains open. This issue is indicated in a number of general problems of regulating relations on the Internet. The impetus was the development of the draft Part four of the Civil Code of the Russian Federation, which initially provided for the introduction of domain names as means of individualization of information resources.  That is, domain names fit into a coherent system of intellectual property rights objects as means of individualization.

The second no less important problem in the issue under consideration is the lack of uniform regulated methods of forensic economic examinations, or the inadmissibility of using a number of modern economic methods in the production of forensic economic examinations.

The presence of contradictions in existing expert methods makes it possible to question the possibility of obtaining unambiguous conclusions based on the results of expert research.

An expert begins any forensic economic examination by choosing a research methodology. However, the economic expertise carried out in state forensic institutions of various departments has an excellent methodological approach, as well as the interpretation of the term expertise itself has many faces.

The main requirements for the expert opinion remain the principles of relevance and admissibility.

For the full disclosure of economic expertise, we will focus in more detail on the application of expert opinions in judicial practice.

As an example, let us consider the conclusions of the court in the framework of a separate dispute in the case of declaring the bank insolvent ^[6].  

The essence of the dispute: The DIA invalidates transactions concluded between the debtor and counterparties within the framework of the use of the trademark and domain name. The bankruptcy trustee disputes transactions that have caused harm to creditors, and a statement on the application of the consequences of invalidity.

The plot of the case: By the court ruling of 16.10.2020, a commission judicial evaluation examination was appointed for a joint separate dispute, the conduct of which was entrusted to several experts.

Thus, in practice, the courts apply a comprehensive examination

However, further, by the court's ruling, expert organizations were replaced within the framework of a unified separate dispute.

Thus, the court has the right to replace the expert, excluding one, appoint another.  

When considering the case, the court gave the following assessment according to the expert's conclusion, when determining the market value of a trademark and the "strength of the brand" (as a separate value forming the market value of the use of a trademark), data on the financial results of the debtor's competitors engaged in business activities related to the debtor and included in a formalized group of companies, in connection with with that, a corresponding sample of analog companies was made.

Regarding the chosen choice of the method of expert research in this part, the expert gave explanations in the court session.

As follows from the expert's conclusion and his explanations at the court session, the representativeness of analog companies, in this case, is predetermined by the circumstances of their functioning along with the debtor in a specific time period, to which there are references in the research part of the examination. At the same time, the analog company proposed in this petition, which, in the applicant's opinion, was mistakenly not taken into account by the expert during the examination, operates in the analyzed market of a later period, therefore, the sample with the participation of this subject is obviously unrepresentative, taking into account the question posed by the court to experts aimed at determining the market value of the right to use the trademark the sign and domain name in a specific period of time. In addition, the petition does not contain primary information about the results of the competitor's business activities, which allows us to conclude that the results of its business activities are significantly different from the results of the business activities of analog organizations selected by the expert, the relevant arguments of the party about the possible change in the final conclusions when the proposed organization is included in the number of analog companies are subjective and based solely on assumptions.

In the present case, the experts' discrepancies took place due to the various methods of expert research applied by them, the corresponding discrepancies were investigated at the court session, the arguments of the parties regarding the admissibility of the approaches used can be given a judicial assessment without re-examination, on the basis of this the court did not see grounds for re-examination. Also, on the one hand, the data of the expert opinion made it possible to recognize the transaction on the use of the trademark by the debtor bank as justified, and on the other hand, the use of the domain name as an invalid transaction. Let's consider the reasoning of the court in more detail.

When evaluating the arguments of the parties, taking into account the opinions of the participants in the proceedings, the petitions of the bankruptcy trustee, the defendants in the transactions and third parties, a commission judicial evaluation examination was appointed within the framework of a joint separate dispute.

The issue of determining the market value of the right to use a trademark according to a certificate for a certain period of time has been raised for the permission of the commission of experts. In the course of the commission forensic examination, the experts differed in the methodology of its conduct, in connection with which they presented different conclusions on the content.

Thus, in accordance with the final conclusion of one expert, the market value of the right to use the trademark was set one, and in accordance with the final conclusion of another expert, the market value of the right to use the trademark was another.

Since, in the final conclusions regarding the market value of the right to use the trademark, the experts differed in the sum, during the period specified by the court, the experts were questioned.

The court found that in the absence of a normatively approved methodological basis for assessing intangible assets in the form of trademarks, the absence of publicly available information on the conclusion and execution of identical transactions involving credit institutions, experts have developed author's methods on the basis of which an examination was conducted.

The fundamental difference between expert approaches is the use by one expert in assessing the value of a trademark of the results of economic activity of a formalized group of companies that used the trademark and associated themselves in the market as a group of companies (holding), regardless of the type of economic activity and the relevant markets, while the second expert determined the value of the trademark as the financial result of the debtor's activities in the specified period. the period applied to one segment of the market – the banking sector. It was these discrepancies of experts, according to the court, that predetermined a significant discrepancy in the final results of the examination.

Evaluating the expert opinions, the court concluded that the methodological approach used by the second expert does not meet the factual circumstances established in the case and the legal nature of the license agreement for the right to use the trademark.

The circumstances of the debtor's economic activity as part of a formalized group of companies (holding) are established in the descriptive part of the examinations, the relevant conclusions are contained in the conclusion of the temporary administration of the credit institution, none of the participants in the separate dispute were disputed.

The court concluded that the purpose of concluding the disputed license agreement for the right to use the trademark is due to the beneficiary's intentions to create a clear associative perception of the bank as a member of a formalized group of companies (holding), and not the creation of an initial independent brand in the banking services market for its provision to third parties.

With this approach, the financial result of the credit institution's activities is determined by the interdependent influence of all participants of the formalized group of companies in each market segment, this mutual influence determines the value of the trademark and, as a consequence, the price of the license agreement. In this regard, the results of the licensee's (credit organization's) economic activity in the context of the activities of other credit organizations cannot determine the value of a trademark.

The methodological approach proposed by the second expert is applicable, according to the court, in the opposite situation, when the bank is the licensor of a trademark for third parties, it is in this situation that financial results in the relevant market segment (banking services) relative to its direct competitors – credit institutions will be of key importance in determining the value of a trademark, in this case the circumstances indicated by the second expert will be important in determining the value of the brand and the price of the contract, but not vice versa.

Since in the present case the debtor is precisely the licensee, when assessing the value of a trademark, the results of competitors' financial activities, graded according to the ratings of the Bank of Russia with the expert approach of the second expert, cannot be used as the basis for assessing the market value of the trademark, since this contradicts the nature of the license agreement for the right to use the trademark (Article 1235 of the Civil Code of the Russian Federation) and the factual circumstances established by the court related to the specifics of the debtor's business in the structure of a formalized group of companies (holding) and the purpose of concluding the disputed contract.

As follows from the content of the interrogation of experts and examination materials, the examination of the market value of the right to use a trademark is an atypical type of examination of intangible assets, and therefore, there are no standard methods for its conduct, in this regard, experts have developed private methods based on the methodological approach of G.G. Azgaldov and N.N. Karpov ^[7], Federal evaluation standards, arrays of information and statistical data of the EMISS and the Bank of Russia.

The court agrees with the position of the first expert that the standardized methodological approach of G.G. Azgaldov and N.N. Karpov to the evaluation of intellectual property and intangible assets, in its pure form, cannot be applied to the evaluation of the market value of trademarks, and therefore, when developing a private evaluation methodology, the expert must take into account special knowledge, experience of expert activity and specific circumstances of a separate dispute to adjust the general methodological approach. In this case, the deviation from the standardized approach is not a violation of Federal Law No. 135 of 29.07.1998 "On Evaluation Activities", as well as Federal Evaluation Standards approved by regulations of the Ministry of Economic Development of the Russian Federation.

In this context, the court rejects the applicant's objections about the need to adjust the final result of the second examination, due to the non-exclusive nature of the disputed license agreement.

The non-exclusive nature of the right to use other intellectual property objects, of course, affects the price of the contract, but in relation to this separate dispute, taking into account the factor of the non-exclusive nature of the license agreement for the right to use a trademark would actually mean stating that there is a payment in the structure of the contract price, excluding the circumstances of the appearance of another player on the banking services market, which will function under the same trademark as the debtor. Since the specified market scenario was unlikely, the debtor and the licensor were affiliated persons, there is no evidence of banking activities carried out by the licensor during the validity period of the contract, as well as by other credit organizations to which the trademark was also provided for use on the basis of a non-exclusive license, banking activities, the court recognizes the legitimate refusal of the first expert to use the adjustments of intermediate and final expert results for the named motive. This factor could not affect the price of the contract.

The court found convincing the arguments of the first expert on the need to use DIY information arrays, rather than the banking sector, taking into account the specifics of the activities of a credit institution as part of a holding of companies that have a mutual impact on the results of economic activity and the value of a trademark, combining these companies into a formalized group.

The question of the mathematical consistency of individual calculations referred to by the applicant, according to the court, belongs to the sphere of expert's special knowledge, since federal standards do not provide for mandatory requirements in this case.

The Court finds it necessary to note that the applicant in a separate dispute declared the unequal value of the counter-provision.

In the conditions of insolvency (bankruptcy) of one of the parties to the transaction, unequal counter-performance of obligations by the other party to the transaction takes place if the price of this transaction and (or) other conditions at the time of its conclusion differ significantly to the worse side for the debtor from the price and (or) other conditions under which, in comparable circumstances, similar transactions.

When comparing the terms of a transaction with similar transactions, it is necessary to take into account both the terms of similar transactions made by the debtor and the conditions under which similar transactions were made by other participants in the turnover (paragraphs 2-4 of paragraph 8 of Resolution No. 63 of the Plenum of the Supreme Arbitration Court of the Russian Federation dated December 23, 2010 "On some Issues related to the Application of Chapter III.1 of the Federal Law "On Insolvency (Bankruptcy)".

The Law on Bankruptcy, the Civil Code of the Russian Federation, the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated December 23, 2010 No. 63 "On some Issues related to the Application of Chapter III.1 of the Federal Law "On Insolvency (Bankruptcy)" does not establish criteria for the materiality of the difference between the price disputed under paragraph 1 of Article 61.2 of the Bankruptcy Law of the transaction from the price and (or) other conditions under which similar transactions are made in comparable circumstances.

Challenging a transaction on the grounds of paragraph 1 of Article 61.2 of the Bankruptcy Law is aimed at protecting the debtor's property status in order to fully satisfy creditors' claims in bankruptcy proceedings, in connection with which, the transaction may be declared invalid if there is evidence that it caused obvious damage due to its commission on deliberately and significantly unfavorable conditions.

Taking into account the prevailing approaches in judicial practice, as a general rule, a multiple overestimation (understatement) of the price of the disputed transaction from the market value is taken as a criterion of materiality, therefore, the size of the errors assumed by the applicant in this case does not matter in principle, taking into account the nature of the legal basis of a separate dispute, as well as the fact that the market size of the fee for the right to use the trademark according to the method of the first expert exceeds the amount of money paid to the defendant.

In addition, the court noted that the legality of the methodological approach used by the first expert during the examination was the subject of judicial evaluation by the courts of the first and appellate instance in a separate dispute in case No. A31-13748/2018-17 in respect of another trademark, also transferred for a fee to the use of the debtor under the license agreement, this approach was recognized as sound and permissible, it is the basis of the judicial act on the refusal to satisfy the claims of the bankruptcy trustee.

The Court found that the license agreement with respect to the trademark and certain additional agreements were concluded outside the time limits provided for in paragraph 1 of Article 61.2 and paragraph 3 of Article 189.40 of the Bankruptcy Law.

Thus, the court concludes that the license agreement cannot be invalidated as committed with an unequal counter-provision in relation to paragraph 1 of Article 61.2 of the Bankruptcy Law on the formal grounds of concluding the main agreement and certain additional agreements beyond the terms of suspicion.

Having considered legislative acts and the application of expert opinion in judicial practice, on a specific case, the following conclusions can be drawn.

In any bank bankruptcy case, the examination makes it possible to obtain additional justifications and evidence when the transaction is declared invalid. In this regard, in order to ensure the reliability of expert conclusions, it is necessary to: develop a unified classification of economic expertise, taking into account the current situation in the economy; determine the place of forensic evaluation in the general classification of forensic examinations, taking into account modern features; determine the regulations for the main methods of financial analysis that will be applicable to forensic economic expertise; determine the main methods and methodologies in evaluation activities; increase the level of requirements for the qualification of an expert.