Shifting Paradigms in Insolvency: The Supreme Court’s Evolving Guidance for Controlling Persons and Affiliated Creditors

On the eve of the New Year, the Plenum of the Supreme Court of Russia approved two key resolutions that introduce new approaches to disputes concerning subsidiary liability and the subordination of affiliated creditors’ claims. In fact, the Supreme Court has softened the rules for subsidiary liability, establishing new methods of protection and drawing the courts’ attention to the need to personalize and individualize liability. Regarding the subordination of affiliated creditors' claims, the position of the Supreme Court indicates a tightening of this institution’s model.

Current case law demonstrates a broad range of bankruptcy proceedings involving Russian entities that form part of large international corporate groups (including, among others, Oracle, Google, SAS, and Domino’s). In situations where such Russian entities lack sufficient assets to settle all creditor claims, bankruptcy effectively represents the only viable mechanism for their liquidation. At the same time, Russian case law is not limited to the insolvency of Russian companies and also encompasses bankruptcy proceedings involving foreign legal entities. Moreover, a significant number of bankruptcy cases involve foreign persons acting as creditors, including in matters concerning the inclusion of their claims in the register of creditors of Russian debtors. These factors underscore the relevance and practical significance of the information set out below.

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