THE SUPREME COURT OF RUSSIA SUMMED UP THE RESULTS OF THE PURSUE OF SECONDARY LIABILITY ON THE DEBTOR’S CONTROLLERS

The Supreme Court has recently published a Review of Judicial Practice, which contains, among other things, a number of explanations of bankruptcy legislation.

Some of the cases, to which the higher court has paid special attention, have already been previously covered by Rusbankrot. In particular, this is a process on the right of a shareholder to challenge a transaction of a company in bankruptcy or a case on the legal possibility of a former participant to participate in an insolvency case.

Among the examples of judicial practice presented in the review, there are also new ones. For example, the issue of holding the debtor’s controller secondary liable. Their fault in the bankruptcy of a company can be reduced to organizing the activities of a corporate group of persons so that the bankrupt company received mainly losses, while other related companies received profit.

The lower courts erroneously did not take into account the arguments of the applicants, which pointed to the influence of persons controlling the debtor on the activities of the latter, while legally no influence was found.

Despite the fact that at the time of the disputable actions, the rule on the presumption of control over the debtor had not worked yet, the courts were obliged to assess these circumstances, given that the applicants directly pointed to them.

Thus, when considering similar disputes, the court is obliged to investigate the degree of influence of the potentially controlling person of the debtor on the activities of the latter, as well as establish a causal relationship between the actions of the affiliated person and the onset of the debtor's bankruptcy (determination of the Supreme Court of the Russian Federation No. 310-ES20-6760 dated September 25, 2020).