Siberian Region Threatening Developers with Bankruptcy

Siberian Region Threatening Developers with Bankruptcy


In the republic of Buryatia, a Siberian region to the east of Lake Baikal, nine construction companies may be declared bankrupt if construction of the problematic facilities, which they are responsible for, is not completed soon. In this way, the regional Fund for Protection of Rights of Participants in Shared-Equity Construction Projects hopes to motivate developers to finish the work as soon as possible.

At the next meeting concerning defrauded homebuyers and problematic objects in the republic, Nikolay Ruzavin, minister of construction industry of Buryatia, declared that the regional Fund for Protection of the Rights of Participants in Shared-Equity Construction Projects is ready to address in Arbitration Court of Buryatia with the requirement to declare 9 construction companies bankrupt if they don't restart works at problem construction sites till the end of March. This refers to the companies DomStroyKomplekt, Tamir, Shenesen, City-Stroy, Promgrazhdanstroy, BusinessInvest, Universal, Regionzhilstroy and Monolith.

Ruzavin said that by the end of March, developers are expected to shape up an action plan – the so-called “road map” – and to prove that they are able to put the houses into operation. “If you do not want to lose your business, finish the houses. We are not going to persuade anyone. If a company has no money to finish a house, it will be recognized bankrupt,” Ruzavin said. He explained this tough position by the fact that the funds for solving the problems of defrauded homebuyers will come from the federal budget. Therefore, it is unacceptable that this money will be used by unscrupulous entrepreneurs.

However, the developers paid back in their own coin. Thus, a representative of DomStroyKomplekt said that the problem lies in the unscrupulousness of homebuyers. The company went to court. In case of winning the lawsuit, about 50 apartments will be released. DomStroyKomplekt wants to sell them and to use the money for restarting construction.

Promgrazhdanstroy is not planning to go bankrupt, too. Its head Anastasia Tsyrenova is ready to start works at the site this March. Although so far there is neither an action plan nor evidence of financial solvency.

Alexey Tsydenov, head of the Republic of Buryatia, also promised that all the problem houses will be finished. He estimated the cost of these works at 500 mln rubles ($ 6,650,050) as a minimum. Tsydenov said that homebuyers can choose whether they want to get a completed apartment or financial compensation. It should be noted that, according to the Ministry of Construction, another 1,300 shareholders are waiting for their apartments in Ulan-Ude.

The homebuyers themselves differ in opinions about what would be more profitable for them -- to wait until the house is completed, or to demand the developer’s bankruptcy. Yelena, a shareholder of one of the problematic objects says that you will have to wait for several years after the start of bankruptcy proceedings. During this time, an unfinished house may fall into disrepair. Many people are worrying about the quality of apartments in the long-delayed construction projects. The government has offered them an alternative in the form of monetary compensation. Moreover, it will be calculated it at the market price.

There was already an instance where defrauded homebuyers decided not to wait for the completion of construction. They took matters into their own hands. In particular, it regards a three-storey house in the 140th square, which was built by the Tamir company. Back in 2016, people were supposed to get the keys to their apartments. However, a few years ago, works at the site stopped. The shareholders set up a housing construction co-operative and invested their own money. They had to connect to the utilities and do interior decoration by themselves.

It is noteworthy that one of the homebuyers decided to file a lawsuit against a developer with the assistance of the Federal Service for Surveillance of Consumer Rights Protection and Human Wellbeing (Rospotrebnadzor.) He won the case, but the penalty for the apartment that he hadn’t got amounted to 250,000 rubles ($3,325.03.) For moral damages he received 4,000 rubles ($53.2). 

Indexation of Pensions Useless: Expert Criticizes Putin's Constitutional Idea Will Resettlement from Dilapidated Houses in Karelia be Finished?