The insolvency of companies in Russia is often caused by the negligent or illegal actions of their shareholders and/or management. The Russian Federal Law on Insolvency has been amended to introduce stricter rules on “controlling persons,” which increases their liability for the damage caused to creditors by their actions.
Those potentially at risk are persons having the right to give binding instructions to the debtor company by virtue of kinship, their legal relationship with the debtor company or otherwise as determined by their actions in the 3 years preceding the company’s insolvency. Depending on the type of action and its gravity, the controlling persons may be subject to civil, administrative or criminal liability, leading to fines and imprisonment.
For further details, see our article published in Insolvency and Restructuring International.
Russia: Liability of Controlling Persons in Bankruptcy Proceedings
This article was first published in Insolvency Restructuring International, Vol 11 No 1, April 2017, and is reproduced by kind permission of the International Bar Association, London, UK. © International Bar Association.