Creditors and trustees argue over bankruptcy insurance

Against the backdrop of an increase in the number of bankruptcies, the crisis in the field of liability insurance for insolvency practitioners (AMs) has worsened, which the courts are again trying to resolve. As Kommersant found out, a new question has arisen in practice: can insurance companies be insured by mutual insurance companies (cooperatives) or only by ordinary insurers, who often refuse. The courts have not yet come to a common position. AU and lawyers interviewed by Kommersant also express different opinions, but are unanimous that the problem has acquired a “colossal scale” and must be resolved at the legislative level.

As manager Kirill Ruin from SRO AU “Sozidanie” told Kommersant, the case on his additional insurance returned by the Supreme Court for the second round (see Kommersant of August 19, 2022) revealed a gap in regulation. Due to the value of the assets of the bankrupt Intellect Drilling Services LLC (IDS) in the amount of 15.7 billion rubles. AU needed to additionally insure for 167 million rubles. He obtained insurance from RICS, which later had its license revoked. It was not possible to draw up a new contract – the insurers refused, citing low margins and threshold limits of up to 10 million rubles. The Supreme Court then allowed the insurance company to insure for smaller amounts in several companies, and the case was returned for a new consideration.

In the fall of 2022, Kirill Ruin again sent requests to insurers, but received refusals even for partial coverage. The only organization with which it was possible to conclude an agreement was the Mutual Insurance Society (OVS) “Etalon”. But one of the IDS lenders, VTB, did not agree with this type of insurance.

The arbitration courts of the first and appellate instances rejected the bank’s complaints, recognizing the AU’s behavior in good faith. The decisions note that the AU contacted both VTB itself and VTB Insurance, from which they did not receive a response. However, on September 21, the cassation upheld the bank’s complaint and removed Kirill Ruin from bankruptcy of the IDS.

The resolution states that OBC Etalon is not an insurance organization and does not have the right to carry out insurance required by law. Moreover, Etalon’s assets for 2021 amounted to only 18.3 thousand rubles, cash – 8.96 thousand rubles, and the German reinsurance company that collaborated with it terminated relations with Russian counterparties. In this regard, Etalon will not be able to fulfill its obligations in the event of an insured event, the court concluded.

The cassation also did not agree that the manager took all measures within his power: by this time, the real value of the IDS assets had been reduced to 4.51 billion rubles, so it was enough to obtain additional insurance for 55 million rubles, which the AU did not do. In addition, the bank presented the court with answers from two insurers who declared their readiness to enter into an agreement, and as a result, the cassation decided that Kirill Ruin illegally failed to act and did not receive additional insurance through his own fault.

Lawyers and AU emphasize that “the problem is very acute” and it must be “solved at the legislative level.” The number of bankruptcies in Russia is growing, and accordingly, the number of insurance cases and the amount of payments are growing, which the few insurers that work with insurance companies cannot cope with, says managing partner of Enterprise Legal Solutions Yuri Fedyukin.

AUs want to be able to “insure liability at a cheaper price,” but insurers do not want to work with them, and if they agree, they do so at high rates, notes AU Pavel Zamalaev. Kirill Ruin confirms the “inflated tariffs of classic insurers” (SK TIT demanded 5.3 million rubles in insurance premium for coverage of 10 million rubles) and considers OVS an “effective alternative.”

According to Pavel Zamalaev, the main reason for refusals is that the recovery of losses from the operating company (they are covered by insurance) is “very difficult to predict.” In addition, intentional actions of managers are also insured, whereas in car insurance, for example, they are not recognized as an insured event, clarifies Yuri Fedyukin. AU Igor Virfel adds that we may also be talking about a “lack of financial reserves” of insurers and a decrease in supply on the market. There may also be a reluctance to contact a specific manager (for example, if there have been many complaints against him) or a debtor, adds AU Sergei Domnin.

The obligation to provide additional insurance depending on the price of the debtor’s assets is now “virtually unenforceable,” admits Forward Legal lawyer Danil Bukharin, so “managers are forced to look for non-standard solutions.” “At its core, OVS is a consumer cooperative that insures its members through their contributions. Naturally, the requirements for OVS from the regulator are lower and control over their activities is not so thorough,” explains Yuri Fedyukin. Danil Bukharin adds that OBC is “a more closed and less reliable structure from the point of view of protecting the interests of creditors from the unscrupulous behavior of the management company,” including that it has no capital requirements and does not publish reports. Classic insurance organizations are under strict control of the regulator, the lawyer emphasizes.

But working with a regular insurer does not guarantee payment of compensation, AU emphasizes. According to Yuri Fedyukin, it is important that OVS can carry out insurance activities on the basis of a license, including in relation to insurance companies: “The absence of a direct prohibition in the law makes such a practice both possible and legal, and in some cases there is no alternative.” At the same time, the head of the council of the National Center for Restructuring and Bankruptcy Union, Valeria Gerasimenko, believes that even securing the right of managers to insure themselves in the OVS will not solve the global problem: “The reasons for the refusal of insurers are economic, and if the provision of a service is not profitable for them, it will not be profitable and OBC.” In her opinion, what is needed is “a comprehensive solution and new regulation, for example, through the creation of a state liability insurance fund for insurance companies.”

Anna Zanina, Ekaterina Volkova