Publication date: 19.05.2024
Clarification of the KGS of the Supreme Court regarding subsidiary liability: the debt evasion mechanism gave a crack
In the first quarter of 2024, the Commercial Court of Cassation as part of the Supreme Court of Ukraine (KGS VS) considered a number of important cases related to the subsidiary liability of managers and owners of debtors. One of the key decisions of the KGS of the Supreme Court concerned the complaint of the head of the LLC, which the court did not satisfy. This decision became an important step in the fight against unscrupulous managers who try to evade responsibility for the company's debts by transferring corporate rights and powers to "nominal" persons.
Decision of the KGS of the Supreme Court: who bears subsidiary responsibility
The KGS of the Supreme Court clearly explained that third parties who bear subsidiary responsibility for the debtor's obligations in connection with bringing him to bankruptcy include any persons whose actions or inaction caused the bankruptcy of a legal entity. This was emphasized in the resolution of the KGS of the Supreme Court of April 22, 2021 in case No. 915/1624/16.
The court emphasized that during the intensive development of the institution of subsidiary liability, the range of circumstances and actions that can lead to holding managers and owners of debtors accountable for the debtor's monetary obligations is expanding.
Absence of a ban on imposing liability on former managers
In its decision, the KGS of the Supreme Court confirmed the absence of a prohibition to impose subsidiary liability on persons if their powers had already ceased at the time of the initiation of the bankruptcy case.The time elapsed from the date of termination of the powers to the date of initiation of the bankruptcy case is not a decisive factor. It is important to take into account the entire set of circumstances of the case when establishing a cause-and-effect relationship between the actions of the subject of responsibility and negative consequences for the debtor.
Presumption of subsidiary liability and its refutation
The legal presumption of subsidiary liability of persons is rebuttable. A person who is being prosecuted has the right to prove his good faith. Lack of interest in providing documents reflecting the real state of affairs and valid economic turnover should not reduce the legal protection of creditors in the event of violation of their rights. If the liquidator substantiated the grounds for bringing a person to justice and the impossibility of repaying creditors' claims as a result of his actions, the burden of refuting these statements is transferred to him. You may be interested in the following articles: lawyer's consultation, lawyer's consultation, document analysis, legal analysis of the situation, written consultation, verification documents by a lawyer, lawyers documents, lawyer's help online, lawyer online, legal opinion, lawyer's legal opinion, lawyer online.The validity of the decision of the KGS of the Supreme Court
The KGS of the Supreme Court took into account the established circumstances and events, in particular, the fact that:
the bankrupt had no assets that could be directed to satisfy the demands of creditors;
the powers of the head of Vyshhorodtransservice LLC were exercised by a head who had a decisive influence on management decision-making;
the manager was aware that in the future the LLC would be obliged to pay the appropriate funds to the tax office.
Attempts to evade responsibility
The Court of Cassation recognized as correct the conclusions of the courts of previous instances regarding the actions aimed at hiding traces of the company's activities from creditors:
re-registration of location;
re-registration of the name of a legal entity;
change of owner and manager after the actual termination of the company's activities.
These actions were recognized as unconscionable, aimed at making impossible the forced collection of debts and the transfer of assets, documentation and other resources belonging to the debtor to the arbitration administrator.
Conclusions
The cases considered by the Supreme Court of the Supreme Court emphasize the importance of subsidiary liability of managers and owners of enterprises. Despite the change in management, location and name of the company, those who caused the bankruptcy can be held accountable. In the age of digital registries and electronic trails, it becomes increasingly difficult to evade responsibility.
These decisions should serve as a warning to unscrupulous managers who try to avoid liability for debts by fictitious changes in the structure of the enterprise.The principled position of the KGS of the Supreme Court contributes to strengthening the legal protection of creditors and strengthening trust in the legal system of Ukraine.
