Subsidiary Liability: Reboot

Sergei Levichev, Head of Bankruptcy Practice, prepared an article for Legal Insight magazine about new norms in the Bankruptcy Law concerning subsidiary liability.

On July 30, 2017, new rules on the liability of managers, founders and other persons controlling the debtor came into force. These rules, on the one hand, systematize and develop the idea of the reform of subsidiary liability undertaken in December 2016 (Federal Law No. 488-FZ), on the other hand, they contain a number of revolutionary ideas that can fundamentally change the existing judicial practice. New ideas are assessed by Sergei Levichev.

In the context of the crisis and "non-working" penal sanctions for bringing the company to bankruptcy, the mechanism for collecting losses or bringing managers and business owners to subsidiary liability is becoming increasingly popular and is viewed by creditors as the only source of compensation for losses incurred. At the same time, according to statistics, enforcement of court decisions on bringing persons controlling the debtor (PCD) to subsidiary liability does not exceed 1%.

Calls for legislative reform of the provisions on the liability of the company's top executives and increasing the effectiveness of this institution have long been heard at different levels. The first major step in this direction was taken in December 2016, when the Federal Law No. 488-FZ dated December 28, 2016 introduced significant changes to the Bankruptcy Law and the LLC Law toughening the liability of managers and business beneficiaries for debts that arose through their fault.

Full article is available at

On October 24, 2017, lawyers of Pavlova & Partners will hold a business breakfast "Subsidiary Liability in Bankruptcy: New Rules". R. Miftakhutdinov, S. Levichev, A. Altukhov will be among the speakers.

Learn more here .

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Ирина Кошечкина