Make it as it was: can non-parties to a transaction claim mutual restitution. Case study, case №А28-12640/2015

17 august 2018

Key matter in dispute: can third parties not being parties to a transaction ask for mutual restitution?

BACKGROUND

Ex-shareholders of StroyTermoIzolyatsiya – Nikolay Popov and Mikhail Shoulepov – did not receive compensation for the value of their shares when leaving business. The company did not have sufficient funds: it had sold several real estate objects (all its assets) and used the proceeds for its daily expenses. Popov and Shoulepov realized that the assets had been gone for nothing - RUR 2 million instead of 16.2 million. They raised a claim on invalidity of the transaction and mutual restitution – in order to get the value of their shares paid out. Since the buyer had already resold the assets, Popov and Shoulepov asked it to reimburse for the difference between fictitious and actual market value.

RULINGS BY COURTS OF THREE LEVELS

Courts held the transaction invalid but refused to award mutual restitution since Popov and Shoulepov were not parties to the sale transaction. Besides that, before claiming money they should have proved that they could not get the assets in kind.

RULING BY SUPREME COURT

The court reversed the ruling of the lower courts: Popov and Shoulepov are entitled to raise the claim since their interest is obvious and they cannot protect it otherwise. They do not have to prove impossibility to return the real estate: the fact that the buyer has sold it is sufficient.

OUTCOME

The case remanded for retrial in course of which the parties reached settlement agreement. They have likely reached a compromise out of court.

COMMENT BY S&K VERTICAL

The courts have previously taken formalistic approach in this kind of cases: after withdrawal from the company shareholders do not have corporate relations with it and, therefore, are not entitled to contest transactions made by the company. Even transactions which were obviously made to withdraw the assets and escape payment of the actual value of the ex-shareholder. Position of the Supreme Court looks logical as the former shareholder that did not get the value of his share clearly has a property interest and shall have an effective legal mechanism to protect his rights in the given circumstances.

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