An example of a bankruptcy trustee’s interest according to the Volgo-Vyatskaya Cassation

A.V. Bezinov was nominated for appointment as financial manager. The debtor objected to this nomination, stating that A.V. Bezinov had provided legal services to the bankruptcy trustee of OOO “Sosnovka”, the former director of which was a debtor, in particular, he prepared procedural documents in defense of the interests of the creditors of the said company, which were opposed by the debtor. Consequently,

The two instances had approved A.V. Bezinov as a receiver. The courts had indicated that the claims of OOO “Sosnovka” were not included in the register of creditors’ claims. The fact that A.V. Bezinov had represented the company before the approval of his appointment as financial manager in the debtor’s bankruptcy case did not in itself indicate that he was interested in the company.

Position of the Cassation:

– Court may not allow the situation, when the powers of arbitration manager are held by a person in whose competence, integrity or independence the court has substantial and reasonable doubts (paragraph 56 of the PP of RF of 22.06.12 № 35);

– Arbitration manager must exclude any kind of conflicts of interest in his activities, must not question the legality and validity of his actions. When deciding on the approval of a candidate of arbitration manager (on the possibility of further exercise of his powers) should be excluded a situation that allows to satisfy only the interests of specific subjects. Formal absence of the established by clauses. 1 and 3 of article 19 of the Law on Bankruptcy signs of interest do not prevent the court to assess other circumstances indicating the actual affiliation, questioning the impartiality and independence of the trustee in insolvency;

– It transpires from the case materials that the debtor is a former manager of OOO Sosnovka which is currently in bankruptcy proceedings and has applied for inclusion of its claims into the register of the debtor’s creditors. The proceedings on the separate dispute have been suspended. The debtor in its turn is a creditor of OOO Sosnovka;

– Presently A.V. Bezinov does not contest on behalf of the latter the legal positions stated by him in the bankruptcy case of the company “Sosnovka” (he supports legality and validity of the judicial act, which declared invalid the transaction of sale of horses, made by the debtor). Thus, a situation had developed in which the financial manager was in effect abandoning the debtor’s property in favor of one of its creditors and was assisting in the debtor’s bankruptcy proceedings under the supervision of the bankruptcy manager of Sosnovka LLC.

To quash the judicial acts and remit the case for a new trial.

Decision of the Supreme Arbitration Court of the High East on 09.06.22 in case No. A43-21098/2018.