Defending a director from RUB 120 million subsidiary liability for tax debts

A presumption based on the size of the tax debt. Article 61.11(2)(3) of the Insolvency (Bankruptcy) Law (Federal Law No. 127-FZ) provides that if claims for mandatory payments arising from a tax offence exceed 50% of the total claims of creditors of the third and subsequent priorities in the register, the controlling person is presumed at fault for the impossibility of fully repaying the company’s debts. It is for the defendant to rebut the presumption.

Article 45 of the Tax Code: recovery outside bankruptcy. The tax authority may demand payment of an organisation’s debt from a dependent (parent or subsidiary) company, or from another person to whose accounts the revenue was paid or to whom assets were transferred. This mechanism exists separately from subsidiary liability in bankruptcy and does not require bankruptcy proceedings to be opened.

Constitutional Court Resolution No. 39-P of 8 December 2017. The Constitutional Court allowed damage to the budget, in the amount of the unpaid tax, to be recovered personally from the director or another controlling person under civil-law rules (Article 1064 of the Russian Civil Code), where the criminal case on the tax offence was discontinued on a non-exonerating ground and the organisation itself cannot pay the debt. This is an independent route, parallel to subsidiary liability in bankruptcy.

Time limit for filing. Paragraph 5 of Article 61.14 of the Insolvency Law allows three years from the moment the applicant learned, or should have learned, of grounds for subsidiary liability, but no more than ten years from the date of the acts or omissions that gave rise to the liability.

“Liquidating the company closes the matter.” A common misconception: with the organisation gone, there is no one to bring a claim against. In practice, the completion of liquidation or the company’s removal from the USRLE does not prevent the tax authority or a creditor from bringing a claim against the former director or another controlling person personally. This is precisely how such cases are most often built.

“Nominal director status automatically exempts you from liability.” A formal position without real influence over the company’s decisions is a weighty argument for the defence, but not an unconditional ground for release from liability. The court looks at who actually took the key decisions, not only whose signature appears on the documents.

Passivity during the bankruptcy procedure. Controlling persons often take no part in the company’s bankruptcy case, do not review the register of creditors’ claims and do not challenge individual amounts included in it, and then face an already established body of evidence in a separate subsidiary liability dispute.

Underestimating the presumption of fault. Where the tax debt exceeds half of the register of claims, simply denying fault is not enough. The presumption has to be actively rebutted by showing good faith and absence of fault at specific stages of running the business and of the liquidation.