KK&P defended two senior executives of a German holding against subsidiary liability amounting to 510 million roubles

KK&P Partner and head of the firm’s bankruptcy practice Nikolay Pokryshkin, and associate Olga Kokoz successfully defended two senior executives against subsidiary liability amounting to 510 million roubles for the bankruptcy of a Russian subsidiary.

The courts held that even if certain controlling persons implemented liquidation measures and complete redistribution of the debtor-company’s assets in case of outstanding liabilities of over 5 million dollars, it would be possible to release them from subsidiary liability if it could be proved that they acted in good faith and that there was no direct causation of the insolvency.

The case also examined the value of major intra-group loans for the purposes of determining indicators and the point of occurrence of a debtor’s insolvency, as well as the causal relationship between respondents’ actions and such occurrence.

The case was complicated by the testimony of five persons (former employees of the debtor-company and, allegedly, the nominal CEO and 100% participant of the debtor-company) against the respondents, which was successfully countered using available evidence and by revealing inconsistencies in the testimony.

Cassation decision (in Russian): http://kad.arbitr.ru/PdfDocument/544c0a86-38f4-4e32-8e7e-bd7740553037/1f06e472-247c-4a02-91b2-6aa402cbe89c/A28-8586-2012_20181126_Postanovlenie_kassacionnoj_instancii.pdf