Massachusetts bankruptcy court denies Chapter 15 recognition of Russian involuntary bankruptcy imposed on individual debtor

On May 8, 2026, Judge Elizabeth D. Katz of the U.S. Bankruptcy Court for the District of Massachusetts (the Court) issued an opinion denying Chapter 15 recognition of a Russian involuntary bankruptcy proceeding filed against Alexander Zheleznyak. The Chapter 15 proceeding was filed by Oleg Ogarkov (the Trustee), the foreign representative and trustee in the Russian proceeding. Judge Katz held that recognition was not warranted because the Trustee failed to establish that Zheleznyak’s center of main interests was in Russia or that he had an “establishment” there sufficient to support nonmain recognition. The decision underscores the importance of establishing a proper basis for the foreign proceeding. 

Background

Alexander Zheleznyak, a Russian citizen, co-founded a Russian commercial bank called Probusinessbank (PRBB). During his time at PRBB, Zheleznyak became associated with Alexey Navalny, a prominent Russian opposition leader and founder of the Anti-Corruption Foundation. In re Alexander Zheleznyak, No. 26-10554 (EDK), ECF 42 (Bankr. D. Mass. April 14, 2026) at 2-5. According to Zheleznyak, this association made both him and PRBB targets of Russia’s state deposit agency (the DIA), which allegedly threatened PRBB executives with criminal prosecution and asset seizure unless they cut ties with Navalny and transferred assets to Russian government officials. Id. at 7-9. When Zheleznyak refused, PRBB’s license was revoked and the bank was liquidated. Id. at 1. 

Zheleznyak fled to the United States in 2015, to live and work in the United States. Four years after he left, the DIA initiated an involuntary personal bankruptcy proceeding against him in Russia (the Russian Proceeding). Zheleznyak alleged that he was never personally served with notice of the involuntary proceeding. Id. at 20. In March 2026, the Trustee filed a Chapter 15 petition in Massachusetts seeking recognition of the Russian Proceeding and to pursue discovery relating to Zheleznyak’s American assets. 

In seeking recognition, the Trustee argued that the Russian Proceeding qualified for recognition under Chapter 15 either as a foreign main proceeding under Sections 1502(4) and 1517(b)(1) or, alternatively, as a foreign nonmain proceeding under Sections 1502(5) and 1517(b)(2), based on Zheleznyak’s alleged continuing connections to Russia. 

The Russian Proceeding was not a foreign main proceeding

Judge Katz began her analysis with the threshold question of whether the Russian Proceeding qualified as a “foreign main proceeding” under 11 U.S.C. § 1517(a) — which requires that the debtor’s center of main interests (or COMI) be located where the foreign proceeding is pending (in this case, in Russia). In re Alexander Zheleznyak, No. 26-10554 (EDK), ECF 42 (Bankr. D. Mass. May 8, 2026) (the Opinion) at 6-10.

In analyzing COMI, Judge Katz explained that “COMI is determined based on a debtor’s activities at or around the time the Chapter 15 petition is filed, however a court may consider the period between the commencement of the foreign insolvency proceeding and the filing of the Chapter 15 petition to ensure that a debtor has not manipulated its COMI in bad faith.” See id. at 8-9.

Applying the COMI analysis here, the Court found that as of the petition date for the Chapter 15 proceeding, Zheleznyak’s habitual residence was uncontestably in the United States. The Court further noted that he had lived continuously in Massachusetts since December 2015, maintained his family home there and operated his consulting business there, and had not traveled outside the United States since 2016. Opinion at 6-10. 

Against this factual backdrop, the Court considered whether the Trustee’s asserted Russian contacts were sufficient to overcome the presumption that Zheleznyak’s COMI was in the United States. The Trustee argued that, notwithstanding Zheleznyak’s residence in the United States, his continuing ties to Russia were sufficient to establish COMI there. Id at 3-4, 9. In support, the Trustee pointed to Zheleznyak’s Russian citizenship, active membership in the Russian bar, alleged ownership of real property in Russia and income previously derived from Russian legal work, and the fact that his creditors were located in Russia. Id.

Zheleznyak responded that those asserted contacts were either historical, legally compelled, manufactured or too attenuated to overcome the statutory presumption that his habitual residence — and therefore his COMI — was in the United States. Id. at 5, 9-10. The Court agreed with Zheleznyak. It held that the Trustee’s evidence, even taken together, did not rebut the presumption that Zheleznyak’s COMI was in the United States. Id. at 9, 11.

The Court concluded that Zheleznyak’s Russian citizenship did not overcome the fact that he had not maintained a residence in Russia or traveled there since 2016. Id. at 9, 11. It also rejected reliance on income from Russian legal work and creditor claims arising from past Russian business activity, because those facts predated the Chapter 15 petition and did not establish COMI at the relevant time. Id. The Court gave little weight to Zheleznyak’s ownership of property in Russia, explaining that property ownership alone did not show that Russia was his “home base.” Id. Finally, the Court found that Zheleznyak’s Russian bar membership and continued retention of a Russian law license were insufficient, absent evidence that he was currently practicing law or earning income in Russia. Id. 

Ultimately, because the Trustee failed to rebut the presumption that Zheleznyak’s habitual residence — and therefore his COMI — was in the United States, Judge Katz held that the Russian proceeding could not be recognized as a foreign main proceeding under Section 1517(b)(1). Id. at 11. 

The Russian proceeding was also not a nonmain proceeding

Judge Katz next considered the Trustee’s assertion that the Russian Proceeding should be recognized as a foreign nonmain proceeding. To qualify, the debtor must have an “establishment” in Russia, which Section 1502 defines as a place where the debtor carries out nontransitory economic activity. The Court explained that the Trustee bore the burden of proving an establishment and that the standard is demanding. Id. at 11. The Court further noted that an establishment requires a seat for local business activity and a local effect on the marketplace; mere record-keeping, incorporation or maintenance of property is not enough. Id. at 11-12.

Applying this standard, Judge Katz found no allegation or evidence that the property Zheleznyak owned in Russia served as a secondary residence or place of employment on the petition date. Id. at 12. The Court explained that, although title to the property had been restored to Zheleznyak through a 2023 Russian court decision, these facts did not show that he was conducting business or carrying out economic activity in Russia. Id. There was no allegation that Zheleznyak had returned to Russia after title was restored, used the property as a residence or workplace, or otherwise used it as a base for local business activity. Id. At most, the restored title showed ownership of property in a country he had not visited since 2016. Id. The Court therefore treated the property interest as mere maintenance of an asset, which was insufficient to establish the nontransitory economic activity required for a Russian “establishment.” Id. The Court also rejected reliance on Zheleznyak’s Russian bar membership and prior legal income because the Trustee did not allege that Zheleznyak was conducting business in Russia when the Chapter 15 petition was filed and conceded that he had not earned income in Russia since 2019. Id. at 13. Accordingly, the Court held that the Russian Proceeding could not be recognized as a foreign nonmain proceeding under Section 1517(b)(2). Id. 

Judge Katz concluded that the statutory requirements for recognition under Section 1517(a) were not satisfied because the Russian Proceeding qualified as neither a foreign main proceeding nor a foreign nonmain proceeding. As a result, the Court denied the Chapter 15 petition and declined to recognize the Russian Proceeding under Section 1517. Id. at 13. 

Judge Katz also declined to address Zheleznyak’s separate argument that recognition would be manifestly contrary to U.S. public policy under Section 1506 because the Trustee had already failed to satisfy the statutory requirements for recognition under Section 1517(a). Id. at 13.

In denying recognition of the Russian Proceeding, Judge Katz also denied the Trustee’s request for additional relief under Section 1520, including application of the automatic stay, as well as discretionary relief under Section 1521, including discovery into Zheleznyak’s assets, affairs, rights, obligations and liabilities because those forms of relief depended on recognition in the first instance. Id. at 4,13. 

Why this case matters

Denying recognition of the Russian Proceeding prevented the Trustee from pursuing the real aim of the Chapter 15 proceeding — discovery against Zheleznyak in the United States. While Chapter 15 proceedings are often used to gain discovery into a debtor’s U.S. assets, that “additional relief” hinges on recognition of a qualifying non-U.S. proceeding, and a politically motivated involuntary proceeding may not qualify. The decision underscores that a key factor is the establishment of the relevant criteria at the time that the Chapter 15 petition is filed and not necessarily historical conduct.