Losses will have to be paid for the use of a naked scheme

Transfer Determination dated 08.05.2024 in case No. A73-14984/2020 (303-ES24-276)

Case background:

The Manager and the Federal Tax Service applied to the court with applications for recovery of losses from the former head of the Debtor in connection with the withdrawal of funds received under municipal contracts through fictitious counterparties.

Positions of the courts:

🔸The courts of two instances satisfied the claims in part.

The courts proceeded from the fact that the unlawful nature of the Debtor’s activities under the direction of the Respondent was established by a tax audit, the results of which were recognized as reliable. The Respondent intentionally (or at least without due care and diligence) carried out a formal document flow with “one-day firms”, which had neither labor nor material resources necessary for the fulfillment of obligations under the contracts. The withdrawn funds were subsequently cashed in. The main purpose of what was done was to take money from the Debtor without justification. This caused losses to the Debtor and, consequently, to its creditors, with whom it was unable to pay its obligations.

The Debtor, acting under the direction of the Respondent, committed unlawful acts as a taxpayer aimed at obtaining an unjustified tax benefit. The said unlawful actions could not have been committed without the manager’s will to commit them and were purposeful in nature. The Respondent could not have been unaware of the fictitiousness of business transactions in which there is no counter-provision in favor of the Debtor.

🔸Cassation reversed the judicial acts in part.

The court referred to the conclusions of the tax audit that the Debtor worked with “one-day firms”, carrying out a formal document flow in order to obtain an unjustified tax benefit through the unauthorized use of VAT tax deductions. However, these findings are insufficient to impute liability in the form of losses, since the obligations under the contracts have been fulfilled. The claims could have been satisfied in a situation where the funds received under the municipal contracts were not used to fulfill the Debtor’s obligations, but were actually withdrawn from the Debtor’s accounts by its manager, which would have entailed negative consequences for the Debtor in the form of an increase in accounts payable due to failure to fulfill the terms of the contracts.

In rejecting the FTS’s arguments that the work had actually been carried out by the Debtor itself or with the involvement of other contractors, the court pointed out that they showed that the disputed counterparties had actually been used by the Respondent to cash out funds, while the FTS pointed to the opposite – the Respondent’s unjustified misappropriation of the disputed sums of money.

The court found that the totality of the circumstances necessary to bring the Respondent to liability in the form of recovery of damages had not been proved, since the obligations under the municipal contracts had been fulfilled and paid in full, and the creation of a formal document flow involving fictitious organizations for the purpose of obtaining an unjustified tax benefit did not indicate the withdrawal of the Debtor’s funds.

Grounds for transfer:

The Applicant insists that the circumstances established by the courts of the first and appellate instances are sufficient to qualify what the Respondent has done as losses to the Debtor and its creditors.

The Appellant referred to the proof of the facts underlying, among other things, the Federal Tax Service’s decision to hold the Debtor liable for taxation: the work was performed by the Debtor and its real counterparties, but not the legal entities named above; money was withdrawn from the accounts without counterparties; subsequently, the cashed-in funds were not directed back to the Debtor’s needs and repayment of its obligations.

Withdrawal of the money resulted in the Debtor’s insolvency and its director could not have been unaware of this scheme.

⚖️Judge: Samuilov S.V.
Date of the hearing: 03.06.2024