A well-deserved downgrade – Newspaper Kommersant No. 158 (7359) dated 08/30/2022

The Supreme Court (SC) agreed for the first time to lower (subordinate) the payment of wage arrears to an employee of a bankrupt company in the queue of creditors, until now such debts have always been priority. We are talking about the salary requirement of the ex-head of Pushkino Bank, who was found guilty of bringing a credit institution to bankruptcy. According to the Supreme Court, the manager must first correct the consequences of his actions, and then count on remuneration.

The Supreme Court ruled (published on August 27) on a dispute over whether the salary claims of the former head of the debtor can be subordinated if he was found guilty of bringing the organization to bankruptcy. For example, Kirill Nikulin, Chairman of the Board of Pushkino Bank, resigned a week before he was declared bankrupt in December 2013. In February 2015, the Pushkin City Court ordered the bank to pay the ex-head of wage arrears for several months and compensation for unused vacation.

Meanwhile, in November 2019, Kirill Nikulin was brought to subsidiary liability for the bank’s debts “for dishonest actions in the performance of his job duties.” The courts recognized that he “hid the real financial position of the bank by providing false reports to the Central Bank” and did not take measures to prevent bankruptcy. However, by this time, Kirill Nikulin himself had been in bankruptcy proceedings for two years already.

On this basis, there was a conflict between the arbitration managers of Pushkino Bank (Deposit Insurance Agency, DIA) and Kirill Nikulin (Mikhail Andreev). They asked the court to resolve the issue of the order of payment of 10.6 million rubles to the ex-head. salaries. The DIA wanted to subordinate the claim, and Mikhail Andreev insisted on priority recovery, as for other bank employees, so that the amount would go to the bankruptcy estate in favor of repaying Mr. Nikulin’s personal debts.

Arbitration courts of three instances ordered the DIA to pay the former head of the bank a salary debt, considering that “subordination is not applicable to labor relations.” The agency appealed to the Supreme Court, believing that it was necessary to subordinate the claims of an unscrupulous person. The case was referred to the Economic Collegium of the Armed Forces, which supported the arguments of the DIA.

The Supreme Court noted that the bank’s bankruptcy occurred “including through the fault of Mr. Nikulin”, who “created a situation in which the fulfillment of obligations to creditors became impossible.” According to the Supreme Court, if the bankruptcy arose through the fault of the creditor, then he is deprived of the right to demand the fulfillment of obligations until he “eliminates the consequences of his own behavior.” Kirill Nikulin “does not have the right to shift the result of his guilty behavior to other creditors,” which means he cannot repay his debt in the same queue as them.

As for the constitutional right to remuneration, in this case its absence is connected with the behavior of the ex-leader himself, “which deprives him of the opportunity to refer in bad faith to the priority of personal requirements.” The presence of own creditors does not change the situation.

The board decided that the claims of the ex-head should be repaid after other creditors. In practice, this means almost zero chances of receiving funds.

Lawyers call the decision unprecedented. Pen & Paper senior partner Valery Zinchenko emphasizes that until now the courts have given the debtor’s employees priority protection, while the Supreme Court has come to the conclusion that any, even salary, claims of a person brought to subsidiary liability can be subordinated. “Reducing the requirements of the head of the bank, which received almost 2 million rubles. per month, perhaps, will not cause accusations of injustice. But, given the tendency to bring everyone and everything to subsidiary liability, ambiguous situations can appear quite quickly,” the lawyer believes. For example, he clarifies, it is not clear whether claims for compensation for harm to life and health can be subordinated.

Aleksandra Alfimova, Senior Associate at Savina Legal’s Bankruptcy and Restructuring Practice, agrees with the Supreme Court, but shares her concern that the College of Economics has not formulated criteria for the subordination of other current requirements, except for salary requirements.

ProLegals partner Elena Kravtsova points to another gap in the SC’s position – “the need to take into account the basic needs of an individual.” When the bailiffs collect a debt from an employee, they leave him “the minimum necessary amount of funds for living”, and “when subordinating the requirements of the employee by the court, of course, a similar principle must also be observed,” Elena Kravtsova is sure. But in the decision of the Supreme Court, the wage debt was completely reduced.

Ekaterina Volkova, Anna Zanina