CONFLICT OF INTEREST AS A BASIS FOR REPLACING THE MANAGER

The applicant applied to the court for the removal of the debtor's bankruptcy trustee (case no. A19-24963/22).

The courts of two instances, refusing to satisfy the stated petition, proceeded from the lack of actual interest of the arbitration administrator and bankruptcy creditors; as well as evidence that during the bankruptcy procedure the administrator acted biasively, solely in the interests of a number of individuals. The damage to the debtor has not been proven.

The cassation granted the application, pointing out that the debtor's bankruptcy case was initiated at the request of the bankruptcy creditor of the entrepreneur. Upon the introduction of the monitoring procedure in relation to the debtor, the candidacy of the interim manager was approved, and then, upon the opening of bankruptcy proceedings, the same person was approved by the bankruptcy trustee of the debtor's property.

The applicant argued that the entrepreneur and a third party had a child together and were running a joint household. This fact is not disputed by the persons participating in the case. In another case, a representative who is the daughter of the said third party acted on behalf of the bankruptcy trustee.

Also, an entrepreneur, a third party, a company, as well as an arbitration administrator use the services of one representative. This person was the sole executive body and participant of the company, at whose request bankruptcy proceedings were initiated against another company, where the person in question was also approved as interim manager. The creditor has issued a general power of attorney to represent the debtor's interests in the name of the representative with a validity period of less than a month.

In the opinion of the cassation, the courts did not take into account the following: according to the explanations of the higher courts, it is sufficient for the party objecting to a specific candidate for the arbitration administrator to confirm substantial and well-founded doubts about the independence of the administrator, in other words, to arouse reasonable suspicions in the court about the acceptability of the said candidate. Reasonable doubts about the independence of the arbitrator are interpreted against his approval.

The Court noted that the actual affiliation of the two persons could be established on the basis of an analysis of a set of agreed indirect evidence characterizing the behavior of these persons. The relationship between the debtor, on the one hand, and affiliated creditors, on the other hand, is clearly of an interpersonal conflict nature, which allows us to conclude not only that the manager is affiliated with a group of creditors, but also that there is a conflict of interest in the debtor's bankruptcy case.

The established circumstances, taking into account the legal approach on the affiliation component, as an obstacle to the exercise of the bankruptcy trustee's powers, are sufficient for the court to have reasonable suspicions about the acceptability of the arbitration trustee's candidacy.

The conclusions of the courts on the absence of grounds for the dismissal of the bankruptcy trustee on the above grounds do not correspond to the actual circumstances of the case and are made without taking into account the provisions of the bankruptcy law and the current explanations of the supreme court on the issue under consideration. The issuance of a power of attorney is only an additional confirmation of the general conclusion that there is an interest.

For the removal of an arbitration administrator on this basis, the fact of harming the interests of the debtor or creditors does not matter, but the presence or absence of an element of affiliation does. The existence of the necessary reasonable doubts has been proved by the applicant, and has not been refuted by the defendant with the necessary degree of persuasiveness.


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