Subsidiary Liability of Controlling Persons

Subsidiary Liability of Controlling Persons


One of the key areas of our expertise includes disputes on subsidiary liability, which is one of the most common claims raised in bankruptcy proceedings in Russia. In a nutshell, granting such claim may result in a personal liability of the debtor’s controlling persons (shareholders, CEO and other controlling persons) for the company's debts. Over the past few years, the number of such disputes, as well as the percentage of sustained subsidiary liability applications has been constantly growing, which gives rise to serious risks for business within the framework of the current economic conditions and potential bankruptcy.

Appreciating the difficulties that the international corporations and their Russian-based subsidiaries may experience, ALRUD is well placed to offer services specifically-tailored to the issues of subsidiary liability to minimize possible risks and ensure best possible outcome of litigation.

Our services

  • Analysis of the prospects and risks of bringing to subsidiary liability, developing a strategy for risk mitigation.
  • Representation in disputes on bringing to subsidiary liability, as well as in interrelated proceedings on challenge of the transactions (claw back action).
  • Representation in parallel proceedings on the territory of Russia and in foreign jurisdictions in disputes on bringing to subsidiary liability.
  • Preparation of legal opinions on Russian bankruptcy law for foreign courts and arbitral tribunals in the context of subsidiary liability.
  • Criminal support in insolvency disputes in the context of disputes on subsidiary liability and recovery of damages.

Highlights of recent domestic and international work

Beneficiaries and top managers of one of the largest Russian private investment funds

in more than 10 parallel disputes on bringing to subsidiary liability. A combination of thorough theoretical background and practical knowledge alongside with a carefully elaborated litigation strategy opened an opportunity for reaching a beneficial settlement.

The largest Chinese manufacturer of construction equipment

in the bankruptcy case of a Russian construction company, during which we managed to identify and hold subsidiary liable all controlling individuals and legal entities of the debtor, including legal entities that were created after bankruptcy in order to accumulate the illegally withdrawn debtor's assets.

A former Member of the Board of one of the top-ranked Russian banks

in a subsidiary liability case for over 200 billion rubles. This dispute is one of the largest subsidiary liability disputes in Russia.

One of the world's largest car manufacturers

in a series of interrelated disputes over subsidiary liability in bankruptcy cases of its distributors.

A minority shareholder of one of the largest coal companies in Russia

in a complex corporate dispute with a majority shareholder arising from the withdrawal of the company’s assets in several jurisdictions. As a result of the implementation of a comprehensive strategy for protecting the minority shareholder in several jurisdictions, the parties reached an amicable agreement on terms acceptable to the client.

A well-known Russian and European entrepreneur and investor

in a dispute on bringing the controlling persons of the debtor to the subsidiary liability considered in the frame of the Russian IT-company bankruptcy case.

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