Russian courts are increasingly holding beneficiaries to subsidiary liability

Over the past five years, the number of persons held vicariously liable by Russian courts as part of bankruptcy proceedings for companies has increased one and a half times – from 3.4 thousand to 5.3 thousand people. Stanislav Golunov, head of the Bankruptcy practice at Enforce Law Company, spoke about this at the conference “Bankruptcy 2024”organized by the Kommersant Publishing House.

According to Mr. Golunov, in 2019, 6.1 thousand applications were filed to bring persons controlling the debtor (KDL) to subsidiary liability, of which the courts satisfied 2.5 thousand and brought 3.4 thousand KDL to “subsidiary”. In 2020, these figures were 6.6 thousand, 2.6 thousand and 3.2 thousand, respectively, in 2021 – 6.8 thousand, 3.1 thousand and 4.8 thousand, in 2022 – 7.3 thousand, 3.4 thousand and 5.1 thousand. Finally, at the end of last year, the number of applications amounted to 6.5 thousand, the courts satisfied 3.3 thousand and attracted 5.3 thousand CDLs .

“On the one hand, we see that over the past year fewer applications for subsidiary liability have been filed. On the other hand, the number of persons who are brought to subsidiary liability is growing,” stated Mr. Golunov.

At the same time, the trend towards a reduction in the ratio between the number of applications filed for subsidiary liability and judicial acts adopted is alarming, the expert added: “If in 2019 the share of satisfied claims was 41%, then by the end of 2023 this figure is already 51%.” According to Mr. Golunov, this trend leads one to wonder how effective this process is and whether those persons who are involved in bankruptcy and are its culprits are really involved in the “subsidiary”.

Why 2024 began with an increase in bankruptcies of legal entities – in the Kommersant publication “Business makes failures”.