THE SUPREME COURT: HEAD OF COMPANY IS NOT OBLIGED TO APPLY FOR BANKRUPTCY AFTER THE FIRST DEBT

The Supreme Court of Russia has recently considered a case on bringing the head and the only participant of the debtor to subsidiary liability. One of the creditors insisted on this, referring to the arisen and not implemented need for the director to file a bankruptcy petition for his company in connection with the existing debt.

The courts of three instances unanimously took the side of the creditor, indicating that the debtor did not fulfill the obligations under the contract with one of the counterparties. As a result, a debt arose, which is the ground for filing an application for bankruptcy.

However, the highest court did not consider this circumstance sufficient to bring the director to subsidiary liability.

The board of the Supreme Court recalled that the obligation to file an insolvency petition for his (her) own company becomes necessary for its head at the moment when a bona fide and reasonable director, within the framework of normal management practice, objectively reveals the circumstances named in paragraph 1 of article 9 of the Law on Insolvency.

Thus, the moment of filing a bankruptcy petition for your own company is determined in each specific case individually and is directly related to the manager's awareness of the seriousness of the situation.

At the same time, the manager should understand that the further continuation of normal economic activities without harm, both for his company and for its creditors, is no longer possible (determination of December 10, 2020 in case No. 305-ES20-11412).