Management Liability in Bankruptcy Cases: 2020 Results

Attempts to impose secondary liability on corporate managers have practically become a standard practice in any bankruptcy proceedings, and forecasting of an outcome of such disputes is going harder. In case law, complex legal issues relating to assessment of action or inaction of managers of bankrupt companies have regularly been raised.

AGP together with Kommersant conducted an online discussion, during which the experts dwelled on recent trends of applying this legal concept. Dmitri Yakushev, attorney of the AGP’s Litigation/ Arbitration team, told about applying the business judgment rule in secondary liability cases, which is an important legal mechanism aimed at protection of a manager against liability where an objective failure is in place.

Dmitri explained when reasonable entrepreneurship risk goes beyond the point where actions are detrimental to creditors, he also told about evidence of due care and good faith of a company’s management taking decisions which have proved to be disadvantageous to the company.

The discussion was attended by representatives of the banking sector: Dmitri Perepechin, Director of the Litigation Department of Rosbank, and Tatiana Zhandarova, Head of Legal Department for Corporate Loans and Settlements of MCB. The banks’ experts dwelled on the issues of management liability in bankruptcy cases and subordination of creditor claims from the standpoint of crediting institutions.