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The lawyer Tatiana Votinova is being held subsidiarily liable in a case in bankruptcy of the consumer cooperative “Ural Horticultural Company” (bankruptcy case No. А76-22330/2018). The courts have seized all her assets as an interim remedy. 

Tatiana was not a staff member and represented the company in courts under a power of attorney.

Tatiana Votinova: “I noticed long ago that the saying “Force a fool to pray and he will smash his forehead against the ground” is about us. A while ago, a subsidiary liability clause did not operate, however, today it applies to everybody from a director to a cleaner”.

See the full text of the article at https://e.arbitr-praktika.ru/827542

Bankruptcy lawyers must act cautiously to the greatest possible extent

Valeria Tikhonova,
Associate of Bankruptcy projects of the VEGAS LEX law firm
The lawyers representing the interests of their clients in bankruptcy cases do actually bear the higher risks, including those relating to the probable holding them liable along with controlling persons of debtor. The lawyer must treat carefully the content of instructions and scope of rendered services. The work with several companies of one group often involves the provision of services for the benefit of business beneficiaries.

Bankruptcy lawyer must act with great care. Representing the interests of debtor or creditors, lawyers do not only take part in the court sessions within the framework of bankruptcy case or adversary proceedings with regard to disputes related to the case.

It is not uncommon that bankruptcy lawyers represent the client’s interests in criminal proceedings initiated in respect of controlling persons by prosecution agencies or Federal Service for State Registration, Cadastre and Cartography (Rosreestr). The lawyers may also be applicants under disputes over holding insolvency practitioners administratively liable for violations committed in bankruptcy proceedings.

The judicial practice recognises that the specific nature of a bankruptcy case involves the existence of a dispute between creditors and debtor due to insufficiency of funds for satisfying claims, competition of creditors as well as high probability of the abuse of right (both by the debtor and “independent” creditors). The dispute arisen in bankruptcy proceedings may affect not only the parties to a bankruptcy case but also their representatives.

In practice, defendants regularly file cross-applications against applications for subsidiary liability: some defendants are seeking justice by defending themselves from unreasonable claims while other defendants are doing this in order to put pressure on the opposing parties to the proceedings.

Within the framework of the case under comment, particularly, a court of cassation has established that there is personal and professional conflict between parties in dispute over bringing to subsidiary liability. Having compelled the farm firm “Komsomolskiy” to provide undertaking, a court of appeal has preserved the balance of interests of the parties, and conclusions as to the presence or absence of the status of a controlling person will be made by court when it considers a case over subsidiary liability on the merits.

There is no doubt that the subsidiary liability institution must not become the way of settlement of personal conflicts between the parties to bankruptcy case or their representatives.

Unfortunately, for the time being, there is no realistic way to stand against unreasonable claims for bringing to subsidiary liability.

See the full text of the article in the attached file