What the service includes
Subsidiary liability means that a company’s director or owner answers for its debts with personal assets. Recent practice shows that such claims are brought more and more often, including against nominee directors and former managers.
We build the defence on proving the economic justification of management decisions and the good faith of the director’s actions, both in a case that has already begun and preventively, before one arises.
Russian law presumes the fault of a controlling person in a number of circumstances, such as failure to hand over documents or the absence of mandatory accounts, and the burden of proving otherwise falls on the director. The defence is therefore built on reconstructing the actual picture of business decisions. Where appropriate, we bring in economic expert evidence to show that decisions were taken within ordinary commercial risk and not to the detriment of creditors.
What the service includes:
Who it is for
The situations clients most often bring to us on this topic.
How we work
A fixed fee and a clear plan of action, agreed before work begins. The timeframes below are indicative and depend on the complexity of the case.
Analysis of the claim
We study the application of the bankruptcy trustee or creditor and the circumstances attributed to the director. Timeframe: 2-5 days.
Gathering evidence
We gather documents confirming the economic justification of the contested decisions at the time they were taken. Timeframe: 1-2 weeks.
Court protection
We present the client’s position in the commercial (arbitrazh) court at every stage of the hearing of the application. Timeframe: 3-12 months.
Appeal if necessary
If the court’s ruling is unfavourable, we prepare an appeal or a cassation appeal. Timeframe: 1-2 months.
What you will need at the start
We confirm the exact list for your situation at the consultation. This is a guide so that you arrive at the first meeting prepared.
Key figures
Experience in this practice area specifically, not in practice as a whole.
Common mistakes
Loss or incomplete handover of documents. The director fails to ensure the safekeeping and timely handover of accounting and corporate documents to the insolvency manager, and the law treats their very absence as grounds to presume the director’s fault without further evidence.
Transactions with doubtful counterparties. The director signs contracts with companies without checking their real activity and reputation, regarding this as normal practice, and such transactions later become key evidence in the subsidiary liability case.
Inaction at the first signs of insolvency. The director carries on as usual when persistent signs of inability to pay creditors appear, without seeking a legal assessment of the situation, although delay in filing for bankruptcy is itself a separate ground for liability.
What you get
Refusal to impose subsidiary liability. A court act recording that there are no grounds to recover personal funds from the director in favour of creditors.
Reduced amount of the claimed liability. Where the claim cannot be dismissed entirely, we obtain a proportionate reduction of the sum attributed to the particular defendant.
A documented position on the good faith of decisions. The body of evidence assembled, including minutes, correspondence and the economic justification of decisions, can also be used in related disputes.
Protection of personal assets from recovery. The director understands which property is protected and avoids hasty actions that can themselves become grounds for liability.
Frequently asked questions
Can a nominee director avoid subsidiary liability?+
Formal status does not release a director from liability automatically, but a genuine lack of influence over the company’s decisions is a weighty argument for the defence, especially if the real beneficiary can be exposed.
How long after a company’s bankruptcy can subsidiary liability be claimed?+
The limitation period is three years from the moment the claimant learned or should have learned of the grounds for liability, but no more than ten years from the breach itself.
What is a director most often accused of?+
Failure to hand over documents to the bankruptcy trustee, transactions detrimental to the company before bankruptcy, and failure to take steps to prevent bankruptcy despite clear signs of insolvency.
Can you protect yourself against subsidiary liability in advance, before bankruptcy?+
Yes. Properly documenting management decisions at the time they are taken significantly reduces the risk in future.
Can a director who has done nothing malicious be held subsidiarily liable?+
Yes. In certain circumstances, such as missing documents, the law presumes the director’s fault, so the absence of intent does not by itself protect you: good faith has to be proved with documents.
Who else, besides the director, can be held subsidiarily liable?+
Liability can be imposed on founders, the liquidator, members of the liquidation commission and any persons who actually determined the company’s decisions in the period before bankruptcy.