The Judges of the HCA of Russia suggest that trustees in bankruptcy be allowed to incur judicial expenses

The tax inspectorate and the former trustee in bankruptcy of VIKar LLC (А23-545/10Б-8-17) Andrey Leonov had legal proceedings with the current trustee Igor Gluschenko. The tax men claimed that the latter held no meetings of creditors and did not submit any reports on his activity, and the colleague trustee requested the court to rule illegal the actions regarding current payments (apparently, he received no remuneration, and demanded 349400 roubles).

Gluschenko won both times, represented by an external lawyer also both times. The bankruptcy proceedings were concluded on July 6 of 2012, and after that the trustee filed with the court a claim to recover the attorney expenses from the tax inspectorate and Leonov (15000 roubles each).

The court of arbitration of Kaluga region and the second instance dismissed the claim. The courts ruled that such expenses were bankruptcy case costs compensated out of the debtor’s funds. Besides, the Twentieth arbitration court of appeal pointed out that the professional status of a trustee in bankruptcy included the ability to know his way about the bankruptcy-related legal matters, and therefore the risk of counsel expenses was his to bear.

Then Gluschenko filed a supervision complaint with the HCA. In the complaint, he indicated that it he, and not the debtor, was the party to the dispute regarding the actions of the trustee in bankruptcy. Therefore, the expenses of payment of the attorney services could not be classified as the bankruptcy case expenses. According to Gluschenko, it should also be taken into account that the expenses were made out of his own funds and aimed at the protection of his interests as a trustee.

The HCA Commission agreed with it. When the three judges passed the case to be reviewed by the Board, they reminded that the supervisory instance had already given explanations on the procedure of distribution of judicial expenses in insolvency cases – see the Board Resolution No. 35 dated June 22 of 2012. According to that document, the courts must take into account the connection between those costs and the purposes of bankruptcy, as well as separate disputes within the main case.

Judge Babkin and his colleagues are convinced that that requirement directly concerns the disputes of Gluschenko against the tax authorities and Leonov. First, those disputes were separate. Second, the judicial expenses incurred by the trustee were not directly connected to the bankruptcy measures and were not aimed it its purposes. And since this is so, and since Gluschenko won both trials, the costs of the case should be borne by the losing side – his opponents, concluded the HCA judges.

Lawyers agree with the colleague.

<…> Arthur Rokhlin, Partner of the Law Firm "YUST", is of the following opinion: the winner of the trial is entitled to demand reimbursement of costs pursuant to imperative procedural provisions. The advocate believes: “There are many situations, when it is in fact difficult to separate the trustee from the debtor, but in this case the courts should have followed the formal definition of the parties to the case and had no right to replace those”. He is convinced that, when considering the requests by the trustee in bankruptcy to recover the attorney expenses, the court should have evaluated their validity but not deprived him of the right to bring in an attorney only because of his professional status.

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