Amurskaya Neftebaza LLC applied to the Commercial Court of Kamchatskiy Region to declare PO Kamagro LLC (the debtor) insolvent. On 20 April 2017, the insolvency proceedings against the debtor commenced.

In these proceedings, Joint-Stock Commercial Bank Minitsipalniy Kamchatprofitbank (the claimant) applied to terminate the set-off agreement between the debtor and Aziatsko-Tikhookeanskiy Bank PJSC (the defendant) as voidable.

On 30 May 2016, the defendant and the debtor entered into a loan agreement secured by a mortgage of the ship Kamchatka (Prometey). The debtor sold the ship to Morskoi Trust LLC with the prior permission of the insolvency administrator. Twenty per cent of the purchase price was to be transferred to the debtor's deposit account, opened by the insolvency administrator and solely dedicated to satisfying creditors' claims. The debtor entered into a set-off agreement under which the defendant received the proceeds of the ship's sale as satisfaction of its claims secured by the ship mortgage. The claimant argued that the ship was transferred to Morskoi Trust LLC with the encumbrance, and that the money received by the debtor could therefore not be secured by the ship mortgage. The ship mortgage was not exhausted. In any case, the debtor must have satisfied the crew wages' claim in priority to the ship mortgage claim under art 368 of the Merchant Shipping Code of Russia (the MSC RF).

The Court of first instance rejected the application. The claimant appealed.

Held: The appeal is dismissed.

Under art 367(1)(1) of the MSC RF, claims for wages and other sums due to the master, officers, and other members of the vessel's complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf, are secured by a maritime lien. Under art 368 of the MSC RF, claims secured by a maritime lien have priority over claims secured by a ship mortgage.

The Court found that the proceeds of the sale of the ship were secured by a ship mortgage. The Court rejected the maritime lien arguments on the basis that the claims for wages mentioned in art 367(1)(1) of the MSC RF are secured by a maritime lien only after the crew members are dismissed from the ship and not during the period of employment. Since the crew members were still employed by the ship, their claims for wages were not secured by a maritime lien and did not have priority over claims secured by a ship mortgage. The set-off agreement did not breach arts 367 and 368 of the MSC RF.