News date: 23 June 2017
Dmitry Konstantinov, Lawyer at Ilyashev & Partners Moscow Office, delivered a speech at Pravo.ru Conference “Bankruptcy 2016-2017: Trends, Regulation and Litigation” held on June 23 in Moscow.
In his report “Subsidiary Liability in Foreign Jurisdictions” Dmitry highlighted the mechanism of imposing subsidiary liability using the example of the UK and the USA.
“In Great Britain the concept of fraudulent trading provides for the imposition of liability on the company’s management who knowingly carried on business with the intent to defraud the creditors, noted Dmitry Konstantinov. Such officials shall be liable pursuant to the claim of the executive manager if the latter convinces the court that the respondent was conscious of the unlawful character of such activities. The burden of proof of the plaintiff in such disputes is actually similar to the cases on fraud. For wrongful trading even the controllers of the company, which continued working despite rapidly approaching insolvency, shall be held liable. Such official may evade the penalty only by proving that her actions were aimed at the minimization of creditors’ losses in every way.”
“In the USA a special attention is paid to the argumentation of the reckless behavior of the company’s director that led the company to the insolvency, continued Dmitry Konstantinov. The plaintiff will have to prove that the company’s manager behaved as recklessly that he/she holds personal liability for the unfortunate outcomes. Any plaintiff that suffered loses may collect money from the company’s head.”
At Pravo.ru Conference the experts discussed the landmark cases and expressed their suggestions on the improvement of the existing bankruptcy procedures.