Subsidiary liability is a mechanism used in Russian corporate insolvency cases when the assets of an insolvent legal entity are insufficient to satisfy creditors’ claims. It concerns people who actually controlled the debtor’s decisions—not the company as an abstract entity.
Who may be treated as a controlling person?
Under Article 61.10 of the Federal Law on Insolvency (Bankruptcy), the key question is whether a person had the ability to give binding instructions or otherwise determine the debtor’s actions during the statutory period. Formal job titles are relevant, but they are not the only factor. Courts assess the actual degree of influence over material business decisions.
- a director, liquidator, member of an executive body or a managing company may fall within the analysis;
- an owner or participant with effective voting control may be relevant;
- another person may be assessed where evidence shows real control over the debtor’s decisions or a benefit obtained from improper conduct.
Family relationship, a routine power of attorney, or a job title alone do not automatically make a person a controlling person. The facts, powers and decision-making role matter.
When can subsidiary liability be considered?
Article 61.11 of the Bankruptcy Law links this liability to the impossibility of fully paying creditors where the controlling person’s conduct caused or materially contributed to that result. The statute contains evidentiary presumptions in defined circumstances, including some cases involving missing or distorted mandatory records. Their applicability depends on the evidence and procedural context.
A separate statutory route may concern a failure to file, or late filing of, the debtor’s own bankruptcy petition. The legal test, relevant period and possible amount must be assessed for the particular case; no outcome follows automatically from the existence of corporate debt.
What does a court examine?
Actual control
Who made or could determine significant decisions, whether formally or in practice.
Causal connection
Whether the alleged conduct affected the debtor’s ability to satisfy creditors.
Documents and timing
Corporate records, transactions, financial data and the period in which the facts occurred.
Practical first steps
- Identify the relevant period and the persons who exercised real influence.
- Preserve corporate, accounting and transaction documents.
- Separate a claim for damages from the specialised bankruptcy-law mechanism where appropriate.
- Review the insolvency case materials and procedural deadlines before choosing a position.
Legal framework
The principal provisions are Articles 61.10 and 61.11 of Federal Law No. 127-FZ “On Insolvency (Bankruptcy)”. The Supreme Court’s Plenum Resolution No. 53 of 21 December 2017, as amended, provides guidance on the application of these rules. Legislation and court practice change, so the current version should be checked for a live case.