“Delovoy Peterburg” published comments made by Mikhail Ilyin in an article titled "Drugstores Brought to Court"

8 April 2013
The State Unitary Enterprise (GUP) “Peterburgskiye Apteki no. 2” was made bankrupt by the Committee for the administration of state property (KUGI) and the Health Committee. The award was rendered by the Supreme Arbitration Court of the Russian Federation (VAS).

Lawyers tend to perceive this case as a precedent, because the court decided that the city authorities should repay obligations of the bankrupt enterprise. The decision can negatively affect the city budget as a whole, since KUGI, to this day, does not control economic activities of state unitary enterprises (GUP) and their debts.

Owners are always exposed to liability

The lawsuit against city administration was filed by OOO “Variant” to which GUP “Peterburgskiye Apteki no. 2” (Apteki-2) owed more than 750 thousand rubles. It was impossible to collect the debt through bankruptcy procedure because the enterprise had no assets at all. Then OOO “Variant” asked the court to bring owners of the drugstore network (i. e. KUGI and the Health Committee of St.-Petersburg) to joint responsibility.

The judicial proceedings revealed that as early as in 2006, by decision of municipal authorities, all the premises, property and personnel of the enterprise were transferred to GUP “Peterburgskiye Apteki no. 1” (“Apteki -1”), that was further privatized. At that time the St. Petersburg KUGI was directed by Igor Metelsky, and the Health Committee was directed Yury Shcherbuk.

As a result “Apteki-2” was stripped of licence, lost their assets, and was denied the opportunity to carry out their business activity, to make profit and to settle debts. As a result, the outstanding debts of GUP Peterburgskiye apteki no. 2 amounted to 8 million rubles. Having examined case information in 23 volumes, judges came to a conclusion that Smolny agencies “have knowledgeably taken actions that resulted in the debtor’ bankruptcy”. The Arbitration court of St. Petersburg and the Leningrad region has stated that having analyzed the said actions taken by KUGI and the Health Committee aimed at solving the issue with accounts payable through making GUP-2 bankrupt, they concluded that there is causal connection between steps taken by the founder and bankruptcy of GUP-2”. For this reason the Arbitration court compelled the committees to refund the debt of “Apteki-2”. However, this decision was cancelled by the court of appeal.

The Supreme Arbitration Court thinks different

OOO Variant managed to secure the review of judicial decision in the Supreme Arbitration Court. Defending the position of public authotities, Sergei Kuzmenkov, Head of legal and institutional division, justice department of Committee on finance, claimed that courts did not establish signs of premeditated bankruptcy. Nevertheless, presidium of the Supreme Arbitration Court was fully supportive of claims lodged by OOO Variant, and therefore confirmed the judgment delivered by the court of primary jurisdiction. Viktor Gutov, partner of the law firm Pen&Paper stated that the method public officers choose to liquidate GUP Apteki-2 leaves people asking questions. “There's no reason why they shouldn't just amalgamate the enterprises and privatize them as a single legal entity. However, in this case, they used the method resulting in distressed debts,” he said.

Mikhail Ilyin of law office S&K Vertical also believes that founder’s actions facilitated bankruptcy. “There only remained for the court to state the fact. It would be better to leave a small part of property in the abandoned enterprise, in that case they could prove in court that the enterprise is able to carry out statutory activities and therefore there is no reason for joint responsibility,” explained the lawyer.

Socialism with no records of accounts payable

Judicial precedent can provoke claims from other creditors of troubled state unitary enterprises (GUPs). Actually, no records are kept of accounts payable of St.-Petersburg public enterprises. The press service of committee for the administration of state property explained to DP reporter that “When it comes to GUPs, KUGI merely supervises the use and preservation of the public property. Any supervision of financial and economic activities is within the jurisdiction of industrial executive bodies”.

Pavel Netupsky

Delovoy Peterburg no. 058 (3791), April 8, 2013

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