Loans from founders: shall one include such in the bankruptcy register. Case study, case №А32-19056/2014

20 august 2018

Key matter in dispute: Whether founders may have their claims included in bankruptcy register of their subsidiary if they lent money before bankruptcy. The answer depends on how such loans are qualified. If the essence is civil-law one – then the creditors may find their way in the register, while if the loans are of a corporate nature – there is no such opportunity.

BACKGROUND

Founders of NefteGazMash-Technologii, Igor Sviridov and Victor Yurkov, financed the company through loans out of their own dividends, which allowed the company to stay up. When the company went bankrupt, shareholders decided to get included in the creditors register for the aggregate amount of RUR 10.5 million.

COURT RULINGS IN THREE INSTANCES

Courts included the founders' claims in the register treating the debt as one of civil law nature.

RULING BY SUPREME COURT

The Court reversed all rulings. It explained that loans by the founders may be qualified as corporate debts if they are used instead of increasing the share capital or allow to formally increase non-arm’s length payables. Where an interested party produces evidence of the above – the burden of proof migrates to the shareholder who in turn shall prove civil law nature of the obligation. In brief, the courts should have examined the legal nature of the transactions in more detail.

OUTCOME

The Court refused to include the claims in the creditors register.

COMMENT BY S&K VERTICAL

Supreme Court goes on looking for a balance between interests of the creditors and that of the debtor's shareholders having cash claims against the company. Almost every year Supreme Courts happens to hear a case under which it has to qualify claims of a bankrupt company’s founders. Supreme Court previously indicated the difference between claims arising out of civil relations and corporate relations: the fact that the company's founder acts as the creditor does not preclude entering its claims in the register. However, in this case the court went further and said that even a loan agreement may be of a corporate law nature. In each case alike facts of the case are important, for example – when exactly, before bankruptcy, was the loan provided, was the company in need of the loan funds and for which reason.

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