The comments of the Senior Lawyer Gennadiy Skytskiy on the article “The creditors of the companies can be to be left high and dry” are published in the magazine “Finance”

1 April 2009

Thousands of new companies are registered in Russia every day. However, not all of them de facto make up their mind to establish and be engaged in new business activity – the “‘pure” entities are aimed at replacing those burdened with debts.

The latters will most likely be abandoned or bankrupted. The victims of such a fraud have an opportunity to call the unconscious businessmen to account.

The lawyers engaged in private practice as well as the unprecedented amount of the Internet context advertisements argue in favor of the keen demand for the companies’ registration services. The Saint-Petersburg Direction of Federal Tax Agency does not publish any official statistics, and the inspection for Leningradskaya oblast notifies that it is untimely to make any conclusions about the trend following merely the results of the quarter. At the same time the statistic department informs of the rise of the amount of bills payable, including delinquency in wages payment (up to 50% per month).

Who will bear losses. In many cases those debts, and sometimes even the employees suffering from absence of opportunity to get wages for several month, to receive back the work record cards and to get the references will be kept registered upon the disappeared companies. The suppliers, the lessors etc. find themselves left with empty pockets .

It takes a mere week to establish a legal entity by paying the state due amounting to 2 thousand rubles and the services of legal consultants (3-5 thousand), in case the prospect of spending time in the queue doesn’t cause any joy to someone.

The minimal authorized capital amounts to 10 thousand rubles. It takes a couple of days to transfer all the assets of an operating company to the new one, and after that the predecessor company completely declines the responsibility. The staff, the suppliers, the creditors, the tax authorities etc. may go to law, get writs of execution – in any case the situation remains the same: the debtor doesn’t possess any assets. As a matter of fact, the debtor itself does not exist: for example, by appeal to the office of Katiyusha 2 LLC one will always get one and the same answer - the company does not bear any relation to Katiyusha 1 LLC.

Nominally the founders of the disappeared company Katiyusha are not responsible for its liabilities. However the Civil Code, being applicable for the last 15 years determines that in case the insolvency (bankruptcy) of the company is caused by its founders (shareholders) or other persons, who can take charge of it, the vicarious responsibility over the bankrupt’s obligations may be imposed on such persons.

“Russian legislation as the legislation of major European countries proceeds from the principle of separate property responsibility of the legal entity and its owners. At the same time this principle is not absolute, it possesses several exceptions”, says the Senior Lawyer or the law firm S&K Vertical Gennady Skutsky. “In order to bring the founders or managers to responsibility one should first determine the cause-and-effect relation between the bankruptcy and actions (оr inaction) of the shareholders or other persons. Second, one should prove the guilt of the aforesaid persons in form of the direct intent to lead the company to insolvency”.

No penalty can be executed without the guilt to be proved. According to the specialists, the implementation of the mechanisms laid in the legislature in order to bring the shareholders to responsibility for the company’s liability does not always turn out to be effective, for the reason that the creditor (the plaintiff claiming for paying the debt) is the very party to the case, which the burden of guilt’s proof of the peron who allowed the bankruptcy lies on.

In the near future the significant precedent may be set up in this scope- the state corporation Deposit Insurance Agency (DIA) is going to bring the shareholders of the “VEFK” Bank to responsibility in case the credits are not recovered by the bank. It is necessary to remind that in October the bank had problems with payments, and the DIA took the management over the bank in its own hands by granting to it all the correspondent assets. The investigation has shown that the major part of the credits has been given to the companies, affiliated with the bank’s owners, mainly with Aleksandr Gitelson. For a long period of time the “VEFK” Bank’s accounting reports produced to the Bank of Russia were unauthentic. “In case it turns out to be impracticable to recover the credits, it is possible that the indebtedness be exacted from the bank shareholders. Thus the ex-owners will not succeed in avoiding the responsibility,” said the deputy general director of the DIA Dmitriy Liubinin. The Bank of Russia advocates the implementation of secondary liability to the owners of the banks that got in the readjustment of the DIA.

The creditors (the dismissed employees, the suppliers etc.) of the small entities have not enoughfacilities to conduct such investigationg. “The situation is always complicated by the circumstance that the creditor usually has no access to the documents which are at the disposal of the shareholders or the legal entity and which could form the basis for evidence”-says Gennadiy Skutskiy. At the same time the defendants have lots of opportunities to conceal and falsify such evidence”.

According to the expert’s opinion, one of the ways to solve the problem is to simplify the process of proof in the cases concerning the secondary or joint responsibility of the shareholders. “ For example, the simplification may be reached by placing the burden of proof of the aforesaid circumstances upon thedefendants”- proposes Gennadiy Skutskiy.

The personal offender. Theoretically not only the shareholders, but also the managers of the company may be brought to responsibility. The managers were the very persons who directly controlled the bankrupt LLC and took part in assets-laundering, after all.

No one has abolished the criminal liability of the manager for the malicious evasion from the credit debts repayment (the article #177 of Russian Criminal Code threatens custodial restraint for up to two years for such an offence against the law). However, this clause also has the pitfalls: the amount of the debt should exceed 250 thousand rubles, and be recovered judicially. Thus the creditors should first of all pass through the prickles of the judicial procedure, which the defendant can drag for months long. Moreover, as of the experts, the criminal liability is only possible in case the malicious evasion from debts repayment (the same is the nonfulfillment of the court decision while having an opportunity to pay over the debt) takes place. What if the company has simply no assets as of the date of producing the writ of execution? The plaintiff has to prove that the money has vanished intentionally, what is very difficult.

Above all, the general director is personally responsible in case the salary is not paid or other violation of the labor legislation takes place. The first breach threatens the violator with a mere fine amounting to 5 thousand rubles fine is stated, but the recurring offence against the law within a year in case it is duly and in proper time fixed by the State Labor Inspection threatens the manager with the disqualification for the period from one up to three years long. This means that the violator will be deprived of holding the managing positions in the companies, to form the board of directors (supervisory board) etc. Such precedents have already taken place: Victor Korol, the general director of “Sibaviatrans” JSC was disqualified by the court decision for one year. Office of Transport Prosecutor revealed the fact of money expenditure via the accounts of the third parties escaping the settlement account of the enterprise, which lead to failure to pay the salary to the employees.

However in practice such sanctions may be applied only to the managers of the big companies for the reason that the state authorities have no opportunity to devote themselves to the small ones. Above this, unconscionable businessmen have learned how to protect themselves - they resign from the position of the director general at the opportune moment. Thus, they are not responsible for any breach of the law committed by the company, including its failure to pay the salary .


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