Risk audit
We review the accounts, the transactions within the suspect period, the composition of the governing bodies and the real role of each person. We establish who may be pursued and on what grounds.
PRACTICE / 02
Corporate insolvency and subsidiary liability
We act for the debtor, for creditors and for controlling persons — and we say in advance how it is likely to end.
- Parties
- Debtor, creditor, controlling persons
- Practice case
- Case No. А40-25957/20-106-35
- Consultation
- Free with an engagement
The insolvency of a company almost always continues as an argument about the money of specific individuals: the director, the shareholder, the finance director, sometimes their spouses. An application for subsidiary liability can arrive several years after the business has closed, for sums many times greater than anything that person ever took out of it.
We run these matters from both sides: helping creditors recover money and defending those the other side is trying to make answerable. We understand the procedure from the inside and advise on dealing with the insolvency practitioner.
What we do
- Assess the likelihood of insolvency and the signs of inability to pay — before somebody else files.
- Act on corporate insolvency: preparing the petition, the supervision stage, liquidation proceedings, dealing with the trustee and the creditors' meeting.
- Defend directors, shareholders and beneficial owners against subsidiary liability and damages claims.
- Enter creditors' claims in the register and challenge unfounded claims brought by other creditors.
- Challenge the debtor's transactions — and defend our clients' transactions against challenge.
- Conduct financial investigations: tracing assets that have been moved out, reconstructing chains of transactions, building the evidence base.
- Advise on dealings with the insolvency practitioner and on how the procedures are conducted.
- Run liability claims outside insolvency — after a company has been struck off the Unified State Register of Legal Entities.
Typical situations
- The bankruptcy trustee has applied to hold you subsidiarily liable for the debts of a company you left several years ago.
- Your debtor has gone into insolvency and you need to get into the register of claims in time — and to work out whether the ranking is worth fighting for.
- The company can no longer meet its obligations, and the question is no longer whether to file but who files first.
- The trustee is challenging a transaction you entered into three years before the counterparty's insolvency and is demanding the money back.
- The debtor's assets have gone to relatives and shell companies, and without asset tracing there is nothing to recover from.
Commercial disputes in Russia are heard by the arbitrazh courts — the state commercial courts, not private arbitration tribunals; disputes involving individuals go to the courts of general jurisdiction.
HOW THE WORK IS ORGANISED
How the work is organised
A strategy for each individual
In a subsidiary liability case every respondent has a different story and different evidence. We separate the positions and, where appropriate, obtain an order splitting the claims into separate proceedings — this speeds matters up and stops the court treating everyone as one package.
The proceedings
Defences, evidence, expert reports, ancillary disputes, dealings with the trustee and the creditors. In parallel we control the exposure of assets: attachments, interim relief, restrictions.
Closing
Refusal of the liability application, lifting of interim relief, completion of the procedure and, where needed, support through enforcement.
RESULTS
Cases from this practice
Subsidiary liability2024
2 of 3clients released from the claims
Subsidiary liability claim refused in the AO E. insolvency
The bankruptcy trustee applied to hold three of our clients subsidiarily liable. We obtained an order splitting the claims into separate proceedings and prepared an individual position for each. The Arbitrazh Court of the City of Moscow refused the trustee's application in respect of two of them; work for the third continues.
Read the case
Personal insolvency2020
RUB 41million of guarantor's debt
Guarantor released from debt of more than RUB 41 million
A guarantee given for a corporate loan left a driver on a modest income owing more than RUB 41 million. We assessed the signs of inability to pay, prepared the petition and obtained an order opening the realisation of assets.
Read the case
Insolvency of sole proprietors2020
А40-176655/2020sole proprietor insolvency case
Insolvency of a sole proprietor after a pandemic support loan
A pandemic business support loan turned into a debt the entrepreneur could no longer service. We analysed the structure of his obligations, prepared the petition for his insolvency and ran the case before the Arbitrazh Court of the City of Moscow.
Read the case
QUESTIONS
Frequently asked questions
How many years after a company closes can subsidiary liability still be claimed?
An application may be filed within three years of the day the applicant learned or should have learned of the grounds, and no later than three years from the date the debtor was declared insolvent. In practice claims arrive several years after the business has closed — including after the company has been struck off the Unified State Register of Legal Entities.
Who exactly can be pursued — only the director?
The court may treat as a controlling person the director, a shareholder, the actual beneficial owner and sometimes the finance director or chief accountant, if it is shown that the person determined the debtor's conduct. That is why we examine the real role of each respondent rather than the job title on the staff list.
What should I do if the trustee is challenging my transaction with the debtor?
Gather evidence of consideration given and of market terms: payment documents, acceptance certificates, correspondence, industry prices at the date of the transaction. The deadline for a defence is short and the first defence frames the dispute, so we need to be involved as soon as the application is served.
We are a creditor. Is it worth joining the debtor's insolvency?
That has to be worked out before the claim is filed. We look at the assets, the ranking, any security and the transactions within the suspect period, and tell you what participation is realistically likely to produce: money, challenges to transactions and subsidiary liability — or costs with no result.
Can insolvency proceedings against a company be stopped?
Sometimes: by paying or buying out the petitioning creditor's claim, by a settlement agreement, or by challenging an unfounded claim. What is available depends on the stage, so our first question is always what the court has already ordered.
PRACTICE SERVICES
Individual services
01 / SERVICE
Representing a creditor in insolvency
The debtor has gone into bankruptcy, and a creditor now has less control than it would like but more than it may think.
02 / SERVICE
Bankruptcy of a debtor company
The company can no longer meet its debts, and the question is no longer whether to go into bankruptcy but how to do it properly and in time.
03 / SERVICE
Defence against subsidiary liability
The insolvency officer or a creditor wants you to pay the company's debts personally.
04 / SERVICE
Challenging a debtor's transactions and defending against challenges
Before a bankruptcy, money and property often leave the company, and challenging transactions can be the main way of bringing them back into the estate.
05 / SERVICE
Protecting the director and beneficial owner in insolvency
For a director or owner, a company bankruptcy turns into several parallel disputes: over documents, losses, transactions and their own claims against the company.
NEXT STEP
Let us look at your situation
The consultation is free when an engagement is signed: we tell you whether the matter has prospects and roughly what running it will cost.