Decision by the Supreme Court of Arbitration of Russia: the trustee manager’s insurer will pay for his misconduct

The insurance company will have to pay for the losses caused by the trustee to the creditors of a bankrupt, even if there is a court ruling to exact those directly from the trustee himself.

The Board of the Supreme Court of Arbitration has considered the dispute between the FTS of Russia, represented by the Zabaikalsky Territory Department of FTS, and the OJSC “Voenno-Strahovaya Kompania (Military Insurance Company)” (the case A78-4813/2010). The Claimant (tax authority) demanded from the Respondent (insurance company) compensation for losses caused as the result of violation by the trustee Dmitry Alekseev of the priority of satisfying the claims of the creditors (the FTS included) of the bankrupt enterprises entrusted to him. The courts of arbitration ruled that that over 2 million roubles were payable to the tax authority, but the trustee avoided payment. The today’s meeting decided that the trustee’s insurer was to make that payment.

Natalia Kashevskaya, trustee and partner at the DE FENDO law firm, believes: “The practical situations, when a creditor tries to exact compensation for losses from the trustee, his insurance company and autonomous organization, are rather rare”. This is due to the fact that the legislative body has elaborated the mechanism of compensation of the losses caused by the trustee’s actions, which functions, when the bankruptcy proceedings are already over. Advocate Artem Kukin, Partner at the Firm, believes that the duty of the trustees to insure their liability to third parties acts as such mechanism.

But practice shows that, even with such initial data, the courts were not unanimous – until today.

The monetary liability of the trustee D.Alexeev to the beneficiaries in the case of incorrect performance, as required by law, was insured by the OJSC “Voenno-Strahovaya Kompania (Military Insurance Company)” – 3 million roubles for each agreement. The tax officers were forced to come to the MIC to collect the insurance, but were refused, and then turned to court.

The first instance court (the Court of Arbitration of the Zabaikalsky Territory) upheld the FTS’s claim. The court acted on the premises that the insurer of the trustee was obliged to pay the insurance money to the claimant, who incurred losses as the result of the trustee’s actions. But the 4th Arbitration Court of Appeal and the Federal Court of Arbitration of the East Siberian District revoked this ruling. The courts completely dismissed the Claimant’s request, alleging incorrect construction of clause 4 of Article 931 of the CCRF, according to which the insured himself (that is, the trustee) should have demanded compensation of the losses. In other words, the instances of appeal and of cassation believed that the FTS should have filed the claim not against the MIC directly but against the trustee, who, in turn, would later exact the compensated losses from the insurer, in separate proceedings.

Maria Kolomoytseva, Deputy Head of the Judicial Department of the MIC, explained that all the losses had already been exacted by court form D.Alexeev, but the case stalled on the phase of execution proceedings. The MIC has also refused voluntary compensation – M.Kolomoytseva said that “the claim was restored” by the decisions in relation directly to D.Alexeev. The position of the insurer was: “We don’t know if D.Alexeev is able to perform, but it is his duty”.

While the trustees themselves are often unable to compensate for the losses caused by their activity, many specialists believe that insurance is the only plausible way for the creditors not to remain empty-handed.

When the judges of the SCA Liudmila Novoselova, Nina Ivannikova and Ivan Razumov, remitting the case to the supervision, pointed to the provisions of clause 4 of Article 931 of the CCRF, which directly endow the beneficiary with the right to lay claim to compensate losses directly to the insurer.

The three judges are of the opinion that the fact that the Claimant has already contacted the trustee, but failed to actually receive any money, does not impede the Claimant from contacting the insurance company. If the amount of the losses exceeds the insurance money, clause 3 of Article 25.1 of the Bankruptcy Law stipulates a mechanism, according to which the autonomous organization of the offending trustee is liable for the excessive amount.

The Board, submitting the case to supervision, recommended reviewing the earlier adopted court acts on the case. Advocate Artem Kukin at that time said to Pravo.Ru: “If the Board of the SCA of the Russian Federation upholds this position, it will significantly contribute to the creation of an efficient mechanism of the protection of the creditors’ rights in bankruptcy cases”.

Now that the Board has upheld the first instance court, one, probably, may say that such contribution has been made. At least, the insurance companies will have to pay for the misconduct of the trustees.

For more details see here.