News
Kachkin & Partners attorneys win a joint liability award against the general director of a bankrupt company in an amount exceeding RUB 12 mln
Kachkin & Partners attorneys represented the interests of the owner of a class «A» refrigerated-warehouse facility spanning some 32,500 m2 in a dispute with an unscrupulous management company responsible for transferring all of the lease payments from the warehouse tenants. The firm’s client, Cres Group, decided to suspend all agency relations when the management company suddenly refused to transfer the funds due and owing to the Group for the use of its property.
Under the guidance of Firm Partner Kirill Saskov, Kachkin & Partners attorneys specializing in corporate and arbitration practice won an award recovering the illegally-withheld amounts from the management company – as well as penalties for the delay in payment. The courts dismissed the respondent’s countersuit seeking the recovery of fines for unilateral termination of the agency agreement.
Unfortunately, the litigation didn’t stop there, insofar as enforcement proceedings were unable to discover debtor property sufficient to even partially satisfy the claims of Cres Group. Firm attorneys suggested that the client initiate bankruptcy proceedings against the management company, within whose scope the joint liability claim was ultimately lodged. It has only been relatively recently that case law has embraced the idea of holding the debtor’s controlling parties responsible for joint liability, which is precisely why the victory won by the Kachkin & Partners team in the case has attracted so much attention.
Litigation was complicated by the fact that the general director cited in his defense the total seizure from him of the debtor’s business documents by law enforcement authorities in the course of the execution of a search warrant within the scope of the criminal case, which significantly hindered our attempts to prove the general director’s guilt in the company’s insolvency and failure to abide by the requirements of applicable bankruptcy law. The courts of the first and appellate instance both entered decisions in favor of the director. Nevertheless, the court of the cassation instance agreed with the arguments presented by Kachkin & Partners attorneys to the effect that the lower courts had failed to properly weigh the actions of the general director in terms of their prudence and good faith in the context of his performance of his binding obligations pursuant to applicable bankruptcy law.
As a result, in the course of its reconsideration of the dispute, the court of the first instance entered a decision ordering satisfaction of the joint liability claim in full. Once the court order has entered into legal force, collection proceedings will commence against the director to recover an amount in excess of RUB 12 mln, as a result of which the bankruptcy estate could be significantly augmented and our client’s demands – satisfied in full.
