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From creditor to debtor: how a lawyer became a controlling person of a bankrupt and faced a multimillion lawsuit

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Secondary liability for 23.8 million rubles is being imposed on Tatiana Votinova, a lawyer of an insolvent company, regarding a consumer cooperative bankruptcy case.

In 2017-2018, the lawyer provided legal services to a Ural fruit and vegetable company (the “Consumer Cooperative”) that were not paid. Tatyana Votinova filed a lawsuit to recover a debt in the amount of 400 000 rubles. In 2018, the Consumer Cooperative went bankrupt, and the lawyer became one of its creditors.
Soon after, Tatyana Votinova filed an application for the seizure of the property of the bankrupt shareholders, including the bankruptcy creditor – Agrofirma Komsomolsky LLC. This was the reason for the conflict between the lawyer and the creditor, as a result of which the representative of the LLC resorted to court to bring the lawyer to secondary liability and demand to seize her property. The Arbitration Court agreed to the requirements of the LLC regarding the seizure of the lawyer’s property. The position of the LLC was centered around the fact that the lawyer was aware of all the economic activities of the debtor and virtually acted as a controlling person. As a proof, a power of attorney is being given, which, according to the representative of the LLC, implies “a wide range of powers”, but as Tatiana Votinova herself believes, is “an ordinary judicial power of attorney”. The creditor points out that Votinova represented in court both the debtor and their controlling persons, and also published messages on the part of one of the creditors about the upcoming bankruptcy of the Consumer Cooperative. In addition, according to the LLC, the legal services agreement between the lawyer and the Consumer Cooperative proves that Tatyana Votinova is the controlling person of the debtor.

The incident could become a dangerous precedent in the provision of legal services concerning bankruptcy cases. Moreover, secondary liability related cases are also common for law firms. Thus, the Arbitration Court of the Moscow Region is considering a case of the international law firm Bryan Cave Leighton Paisner (Russia) LLP being brought to secondary liability on the obligations of Stroyalyans LLC. The law firm filed an appeal to involve other persons in the case as co-defendants, since, from the perspective of its representatives, it was they who were the controlling persons of Stroyalliance LLC. However, the court did not allow the appeal, motivating it by the fact that the liquidator had not consent to the involvement of these persons as co-defendants and no claims had been made in relation to these persons.

It is important to note that decisions on both cases have not yet been made, however, it can already be concluded that creditors are trying to reach a range of persons as wide as possible in order to bring them to secondary liability, and there is no mechanism to prevent it yet. Given past experience, now it will be necessary to carefully approach the issues of compliance with the criteria of the controlling person and carefully draw up the relevant documents. A certain dualism is emerging: the institution of secondary liability increases the efficiency of bankruptcy protecting the interests of creditors, but at the same time significantly aggravates the responsibility of controlling persons, whose control is sometimes not obvious or actually absent.

Article prepared by F+P trainee Kristina Mochalova

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