Due to fatal circumstances – Newspaper Kommersant No. 63 (7508) dated 04/12/2023

The Supreme Court of the Russian Federation (SC) recognized that debts to the Social Insurance Fund that arose as a result of compensation for harm to those who died in an accident due to the fault of a debtor citizen can be written off. The lower courts refused to release the debtor from obligations, considering them “indelible”. But the Supreme Court pointed out that the debt, transferred by way of recourse to a new creditor (insurer), “loses its connection with the identity of the victim,” moreover, the citizen caused harm unintentionally. Lawyers call the decision “socially significant”, but see loopholes for abuse.

The Supreme Court clarified the new details of the conditions for writing off debts in the bankruptcy of a citizen. In February 2014, Maxim Dyakonov became the culprit of an accident in which four people died. The Nekrasovsky District Court of the Yaroslavl Region found Mr. Dyakonov guilty under Part 5 of Art. 264 of the Criminal Code of the Russian Federation (violation of the rules of the road, negligently resulting in the death of two or more persons).

The Social Insurance Fund of the Russian Federation (FSS) considered the case to be insured, paid the families of the victims a total of 4 million rubles, and assigned one of the relatives of the deceased an indefinite monthly insurance payment of about 15 thousand rubles. Then, at the suit of the fund, the court of general jurisdiction recovered 4.25 million rubles from Maxim Dyakonov. (amount as at 30 June 2015) by way of recourse.

The debtor could not pay off and decided to file for bankruptcy. The only creditor was the FSS, but as a result of the procedure, the courts refused to write off the debts. The authorities came to the conclusion that the fund’s claim is related to compensation for harm caused to life, and such debts are not written off by law. The courts also noted that “in the event of a tort obligation” (as a result of an offense), the debtor “acted illegally, as evidenced by the sentence passed against him” (see “Kommersant” dated February 10).

The debtor’s financial manager challenged these decisions in the Supreme Court. In his opinion, Mr. Dyakonov has already been punished for the crime and voluntarily compensated the moral damage to the victims, so there is no reason not to release him from his debt. Based on these arguments, the case was referred to the Economic Collegium of the Armed Forces, which canceled all court decisions and released the debtor from obligations.

The Supreme Court recalled that the main goal of the institution of bankruptcy of individuals is “social rehabilitation of a conscientious citizen”, refusal is “an exceptional measure aimed either at protecting socially significant values ​​(in particular, such as the right of a particular person to compensation for harm caused to life or health, to receive pay for work, alimony), or to prevent the encouragement of abuse.

At the same time, the court emphasized, if the FSS is engaged in compensation for harm to life or health, then “the connection of its newly arisen recourse claim with the identity of the victim is lost”, such a claim “is aimed only at an impersonal replenishment of the fund’s budget.” The board noted that, according to the law, it is impossible to write off debts if, when they arise, he acted “in bad faith towards the creditor.” But here the crime is committed by the debtor “through negligence.” At the same time, the citizen repaid the debt to the fund, “as far as his income allowed”, and also “did not interfere” with the formation of the bankruptcy estate and satisfaction of the creditor’s requirements.

Therefore, “the mere fact that a debtor has been sentenced for violating traffic rules is not a basis for non-exemption from debts,” the court explained. But the debtor is “not released” from the “future recourse claims” of the fund for payments that it will transfer to the relative of the deceased, the board concluded.

Metaksya Harutyunyan, a leading lawyer in the banking and bankruptcy practice of Yakovlev & Partners legal group, believes that the position of the Supreme Court has a “socially significant effect.” The court “continued the line aimed at the maximum release of the citizen from debts following the results of bankruptcy,” Ivan Stasyuk, adviser to the RCT consulting group, added.

It is important that the Supreme Court clarified “criteria for the debtor’s illegal behavior for not writing off debts,” since the problem of maintaining debts by the courts after the completion of the bankruptcy of citizens “is of a massive nature,” Elena Kravtsova, partner of ProLegals, emphasizes. The SC, she explains, “has narrowed the grounds down to deliberate action against creditors.” According to Mrs. Harutyunyan, the courts will have to “be more careful in assessing the debtor’s behavior in terms of his good faith.”

Ekaterina Volkova