Liability for Non-Filing of a Bankruptcy Petition (the Novels of Insolvency Legislation and Current Corporate Rules)

Abstract

The article is devoted to the analysis of the problems concerning the definition of thegrounds of subsidiary liability of those who are responsible for initiation of the insolvencyprocess by filing the debtor’s petition. The emphasis is put on the results of the bankruptcylegislation reform of 2017: the research covers court practice over the period of last threeyears; gaps and controversies of the renovated legislation revealed by representatives ofthe legal doctrine. One of the key aspects of the research is the correlation of the novelsof bankruptcy legislation with the basic current rules regulating corporate relations.The role of the director of the corporation is examined in correlation with other bodiesor controlling persons who directly influence his / her decisions regarding filing thebankruptcy petition or refraining from doing this. The authors highlight the ambiguity of the situation when there are two or more chief executive officers who can potentiallyrepresent opposite positions of different shareholders within the pre-bankruptcy period.Special attention is given to the problem of non-logical correlation of powers of the chiefexecutive officer and the general meeting of shareholders authorized to make a decisionon the liquidation of the corporation. The formal absence of grounds of liability of themembers of the collegial bodies of the corporation and controlling persons (such asshareholders putting pressure upon the director in order to avoid the initiation of theinsolvency process at the stage of the occurance of the debtor’s obligation to file thepetition) seems to be a major gap in current legislation. The authors are demonstratingthe necessity of spreading liability on the informed members of the board of directorsand controlling persons, non-acting or acting against filing the petition. Also the researchpresents the analysis of the legal barriers for imposing the initial obligation to make adecision to file a bankruptcy petition on the collegial body of the corporation, such asuncertainity of the scope of persons liable for non-using the right to request to convenean extraordinary meeting of shareholders; ignorance of the role of the board of directorsin the corporation; lack of attention to differences in the scope of powers of the generaldirector in a joint-stock company and a limited liability company; impossibility to demandto vote for liquidation; unreasonably shirt terms of convening an extraordinary meetingunder the new rules of Bankruptcy Act. The authors are proving that the scope of liablepersons should depend on the type of the corporation. The conclusions concerning thelimits of shareholders’ liability are suggested as well.
For citation: Pirogova E., Zhukova Y. Liability for Non-Filing of a Bankruptcy Petition (the Novels of Insolvency Legislation and Current Corporate Rules). Pravo. Zhurnal Vysshey shkoly ekonomiki, no 2, pp. 139–160 (in Russian) DOI: 10.17323/2072-8166.2021.2.139.160