Subsidiary liability in case of bankruptcy of a legal entity

Recently, the number of bankruptcy cases has increased significantly. Some enterprises and citizens are indeed in an extremely difficult situation and therefore they are taking such a step. Other individuals start bankruptcy proceedings to “sanitize” their business. As a result, they write off almost all of their debts. Meanwhile, controlling structures show an increased interest in any such business.

Subsidiary liability in case of bankruptcy of a legal entity

The legislation provides for several types of legal entities. The most common today is LLC. This form is considered by many founders as the most suitable, since they believe that all risks are limited by the size of the authorized capital. However, in the case of recognition of the insolvency of the company, this is not always the case. In each organization there are entities on which subsidiary liability may be imposed in bankruptcy . They, in particular, are the sole executive structures of the company with the authority to give binding instructions. Such bodies are classified as “supervisory”. The presumption of guilt applies to them. If there are several such entities, then subsidiary liability in case of bankruptcy of a legal entity shall be jointly and severally applied to them.

general characteristics

Bankruptcy subsidiary liability means “additional”. It is assigned to certain entities if the property of the company is insufficient to satisfy all claims. Subsidiary liability in the event of bankruptcy of a debtor presumes the recovery in the form of personal material values ​​of founders, managers, etc.

Principles

When assessing the risk of sole bodies, a number of nuances must be taken into account. In civil law, the basic principles of the activities of structures are established. They are, in particular, reasonableness and good faith. The relevant provisions are present in article 53. In Art. 53.1 of the Code says that if dishonesty and unreasonability is proved in the course of fulfillment of obligations and exercise of rights by the executive body of the enterprise, or it is established that its actions did not fit into the usual conditions of circulation or did not correspond to business risk, then it bears subsidiary liability in bankruptcy. Judicial practice in this regard is very ambiguous. General rules of the Civil Code may play an important role in the proceedings.

The essence of the situation

Any enterprise can become insolvent. This is due to different circumstances. For example, such a situation may be caused by incorrect management decisions, deliberate evasion of obligations, etc. Founders and management should understand that in such cases subsidiary liability may occur . In bankruptcy, quite often it happens that the property of the company is not enough. This is also due to different circumstances. However, they will not be relevant in satisfying claims of creditors.

Definition

Subsidiary liability in bankruptcy is the possibility of recovering the outstanding amount from one of the additional entities if the primary is not able to satisfy the claims of creditors on their own. As is clear from the foregoing, they include founders and leaders. It is on them, first of all, after the immediate debtor that additional responsibility is entrusted.

Normative regulation

The subsidiary liability for bankruptcy of an LLC in the Republic of Belarus, as in the Russian Federation, is regulated by the relevant law. In Russia, in particular, it is the Federal Law "On Insolvency". It establishes the obligation to repay all debts by an enterprise declared insolvent. Often, their amount significantly exceeds the amount of company assets. According to the norms of the Civil Code, which also regulates this area, the corresponding obligation is assigned to the founders and managers. In addition to the Code, normative regulation is carried out by the Federal Law "On JSC" and "About LLC". They repeat the conditions provided for in the Insolvency Law.

Circle of subjects

Bankruptcy subsidiary liability may be assigned to:

1. Founders - business participants.
2. Company executives whose fault caused insolvency.
3. Trustees, whose authority includes the management of shares in the enterprise.
4. Other citizens who do not have a legal relationship with the company, but actually carried out management for two years before the onset of insolvency.

As the 2nd article of the Law on Insolvency indicates, an individual will be recognized as involved in the conduct of business of the company if:

1. It gave instructions that are binding.
2. Determined the actions of the company through beliefs, authority, coercion of executive structures.
3. Directly influenced the head and other participants of the company who made management decisions.

Conditions

Under what circumstances does subsidiary liability arise in bankruptcy? Judicial practice proceeds primarily from the provisions of the Federal Law "On Insolvency". According to the amendments adopted in 2009, in order to attract founders, managers and other controlling entities to the procedure, a number of conditions must be observed. Subsidiary liability in the event of the bankruptcy of a municipal unitary enterprise or other, including a commercial enterprise, occurs:

1. If there is a decision made by the arbitration court that the company is declared insolvent.
2. After determining the amount of claims made by creditors.
3. At the end of the formation of the bankruptcy estate and its implementation.
   

Initiators

Legal persons can apply to the court with requirements for holding them accountable. Often the initiator is the arbitration manager. In addition, subsidiary liability in bankruptcy may be assigned at the request of the most insolvent entity. If he is confident that in the prescribed period he will not be able to repay his obligations, then it is more profitable to send an appropriate statement. In this case, he will receive significant advantages. For example, he has the opportunity to control the entire process of recognition of insolvency.

Important point

Independent submission of an application by the debtor is allowed only in cases established by law:

1. Failure to meet creditors' claims for repayment of obligations.
2. Inability to carry out business activities in connection with the imposition of foreclosure on property.
3. Evidence of insolvency.

Competition manager

He also has the right to initiate bankruptcy proceedings and demand the involvement of controlling persons in subsidiary liability. But in this case, the legislation establishes a number of conditions:

1. Requirements for the company should exceed 100 thousand rubles.
2. More than three months have passed since the beginning of debt.
3. The amount of unliquidated obligations is confirmed by the decision of the arbitral tribunal that has entered into force.

It should be said that only the amount of debt without penalty, loss, interest on delay is taken into account. If the amount of liabilities is less than 100 thousand rubles, then creditors can write a collective statement.

Federal Tax Service

The tax inspectorate is also entitled to initiate a procedure for recognizing insolvency. The subsidiary liability for the bankruptcy of a bank or other commercial structure at the request of the Federal Tax Service may be imposed:

1. For financial obligations, if from the date of entry into force of the relevant arbitration decision they have not been repaid.
2. For taxes and fees, if more than a month has passed since the tax authorities passed the decision.

It is worth saying that in the latter case there comes not only subsidiary liability in bankruptcy. What penalty will be imputed to the company is decided by the Federal Tax Service. The basic rules for the collection of penalties are established in the Tax Code and the Code of Administrative Offenses.

Subsidiary liability in case of bankruptcy of an individual

Since 2015, a procedure has been applied for recognizing insolvency of citizens. Innovations make it possible to recover from personal founders, managers and other controlling entities their personal property if it is not possible to do so when brought to subsidiary liability. How it works? In such cases, the courts use the following wording: the obligations that a citizen incurred in connection with bringing to insolvency liability by a creditor of an insolvent enterprise act as a basis for initiating bankruptcy proceedings against him. Controlling entities should be wary of this if the size of the requirements that are presented to them is more than 500 thousand rubles. At the same time, citizens are not able to repay them within 3 months. from the date of entry into force of the court decision.

Negative consequences

Subsidiary liability in case of bankruptcy of an individual carries a number of risks for the citizen. First of all, lenders get the opportunity to challenge any transactions concluded by regulatory entities. These include prenuptial agreements and property donation agreements. According to the general rules, after settlements with creditors are completed, a person (legal or physical) recognized as bankrupt is exempted from subsequent repayment of obligations. However, there are several exceptions to this rule. The main one concerns the requirements for bringing a citizen to subsidiary liability. In other words, claims after recognition of the insolvency of the entity will remain valid regardless of when they were filed. Creditors may also submit claims upon completion of proceedings. As a result, the controlling persons of a bankrupt enterprise, brought to justice, will not be able to get rid of the obligations imputed to them. Even the procedure for recognizing personal insolvency will not help in this. Debt arising under subsidiary liability will remain until full repayment.

Legal requirements

The head, the founders of the enterprise can be held accountable in accordance with the provisions of article 401 of the Civil Code. This requires the presence of:

1. Illegal violation of duties assigned to a citizen officially.
2. Losses incurred by the company as a result of illegal actions of the entity.
3. The relationship between face behavior and company losses.
4. Proven Guilty Citizen.

The prosecution is carried out only when all requirements are met in aggregate. Accordingly, each circumstance should have documentary evidence. A statement is drawn up for controlling entities. It, in fact, sets out the requirement to hold them accountable. Arguments should be made with reference to legislation. In addition, you must specify a financial audit of the debtor. All claims of creditors must also be documented. In addition to the application, an extract from the account is attached, as well as a copy of the request for the transfer of accounting documents. All of these materials are carefully examined by the court.

Reasons for making claims

The prosecution of controlling persons is carried out in cases:

1. Causing damage to creditors as a result of the conclusion by certain entities of certain transactions.
2. There is no necessary data in the accounting documentation or no reporting at all.
3. Distortion of information in financial securities resulted in losses.
   

Certainly, these are far from all possible reasons why entities bear subsidiary liability. Situations can be very different. However, in any case, the requirements established by law must be observed. Otherwise, any imposition of additional obligations is unlawful.

Exceptions to the Rules

In some cases, it is not possible to bring subsidiary liability to subsidiary liability. In particular, the relevant requirements cannot be presented if the absence of guilt in their actions is established. It is not allowed to hold citizens accountable after the liquidation of a legal entity, unless a bankruptcy procedure has been initiated with respect to the company. The corresponding provision is present in article 419 of the Civil Code. A person cannot be held liable in the absence of a causal link between his actions and the damage that has occurred. She proves that it was the behavior of a particular subject that led to losses in connection with which the company became insolvent. To establish this relationship, it is necessary to have documentary evidence of all actions of the person held accountable. A prerequisite is the insolvency procedure of the company. If it has not been started, subsidiary liability cannot be applied to anyone. Moreover, legislation provides certain advantages for founders and management. If they independently submitted a statement on the start of the procedure, then they cannot be held subsidiary liable. This is the only way to avoid new obligations. It often seems to controlling subjects that it is difficult and even impossible to make such a decision, but there is no other way. Otherwise, they may become eternal debtors.