Administrative responsibility of arbitration managers - an inside view
PART 1. WHO HAS THE RIGHT TO FILE COMPLAINTS AGAINST THE ACTIONS OF THE ARBITRATION MANAGER. POWERS OF THE CONTROL (SUPERVISION) AUTHORITY.
Administrative proceedings under Art. 14.13 against the Arbitration Manager is initiated according to the rules of Art. 28.1 of the Code of Administrative Violations.
As practice shows, there are two main reasons for initiating an administrative case against the Arbitration Manager:
— direct discovery by officials authorized to draw up protocols on administrative offenses of sufficient data indicating the existence of an administrative offense event;
- statements of persons participating in the bankruptcy case, and persons participating in the arbitration process in the bankruptcy case, the management bodies of the debtor - a legal entity, a self-regulatory organization of arbitration managers, containing sufficient data indicating the presence of an administrative offense event.
However, there are often cases of verification of the activities of an arbitration manager at the request of a person who has nothing to do with the bankruptcy case in which this arbitration manager was appointed. In such circumstances, the supervisory authority turns to the Law “On Citizens’ Appeals” and argues that it, as a body of the Government of the Russian Federation, has no right not to respond to citizens’ appeals, while justifying the initiation of an administrative case without proper appeal from the person involved in the case about bankruptcy according to the rules of paragraph 1.1 of Art. 28.1 is the reference in paragraph 1 of this article, namely, the direct discovery by officials authorized to draw up protocols on administrative offenses of sufficient data indicating the existence of an event of an administrative offense.
According to paragraph 3 of part 1 of Article 28.1 of the Code of Administrative Offenses of the Russian Federation, the grounds for initiating a case of an administrative offense are messages and statements of individuals and legal entities, as well as messages in the media containing data indicating the existence of an administrative offense event. (Resolution of the Supreme Court of the Russian Federation dated August 17, 2015 N 305-AD15-6786 in case N A40-117929/2014)
By virtue of clause 3, part 1, art. 28.1 of the Code of Administrative Offenses of the Russian Federation, the reasons for initiating a case of an administrative offense are messages and statements of individuals and legal entities, as well as messages in the media containing data indicating the existence of an administrative offense event (with the exception of administrative offenses provided for in Part 2 of Article 5.27 and Article 14.52 of this Code (Resolution of the Seventeenth Arbitration Court of Appeal dated October 17, 2016 No. 17AP-13047/2016-AKu in case No. A71-6759/2016) It turns out that anyone who visits the site https://bankrot.fedresurs.ru / maybe, having received information about the appointed arbitration manager, he can write a complaint against him, and this complaint, by virtue of clause 3, part 1, article 28 of the Code of Administrative Offenses of the Russian Federation, will be considered and administrative proceedings will be initiated on this complaint.
In most cases, when conducting an audit of the activities of the Arbitration Manager within the framework of the initiated Administrative proceedings on a complaint, the supervisory authority requests documents that are completely unrelated to the facts specified in the complaint and thus has the opportunity to hold the arbitration manager accountable upon discovery.
Here the question arises whether the actions of the supervisory authority are legal to go beyond the scope of the complaint and request documents not related to the facts specified in the complaint. The Administrative Code does not answer this question.
By analogy with inspection procedures for other administrative structures, regulatory authorities inspect enterprises and individual entrepreneurs based on the facts of the complaint, other documents regarding the entire activity of a legal entity or individual entrepreneur are not requested, and only if, when visiting the place where an administrative offense was committed (location of the legal entity and individual entrepreneur) another violation of the rules of a certain activity will be revealed that is not specified in the complaint; an administrative investigation may follow upon the discovery. But in the case of an Arbitration Manager, the supervisory authority requests all documentation on the activities of the Arbitration Manager in relation to a particular debtor. It turns out that the Arbitration Manager is completely unprotected from additional checks not related to “legitimate” complaints of persons participating in the bankruptcy case.
It is interesting to consider the history of the development of legislation regarding the development of Art. 28.1 Code of Administrative Offenses of the Russian Federation.
Until July 2007 Art. 28 of the Code of Administrative Offenses contained only points 1,2,3,4,5.
Federal Law of July 24, 2007 N 210-FZ “On Amendments to the Code of the Russian Federation on Administrative Offences”, Part 1, Art. 28 of the Code of Administrative Offenses of the Russian Federation was supplemented with paragraph 1.1 with the following content:
The reasons for initiating cases of administrative offenses provided for in Articles 14.12, 14.13, 14.23 of this Code are the reasons specified in paragraphs 1 and 2 of part 1 of this article, as well as messages and statements of the owner of the property of a unitary enterprise, management bodies of a legal entity, an arbitration manager, and when considering a bankruptcy case - a meeting (committee) of creditors.
It turned out that since July 2007. the reasons for initiating an administrative case under these articles were:
1) direct discovery by officials authorized to draw up protocols on administrative offenses of sufficient data indicating the existence of an administrative offense event;
2) materials received from law enforcement agencies, as well as from other state bodies, local government bodies, and public associations containing data indicating the existence of an administrative offense event;
3) messages and statements of the owner of the property of a unitary enterprise, the management bodies of a legal entity, the arbitration manager, and when considering a bankruptcy case - a meeting (committee) of creditors.
Those. The supervisory authority accepted for consideration an application for violation by the arbitration manager of the rules of bankruptcy legislation only signed by a special person - an employee of a government body or a representative of a meeting (committee) of creditors.
The bankruptcy creditors simply did not have the right to complain about the actions of the arbitration manager. But this did not mean at all that bankruptcy creditors had no protection if their rights and legitimate interests were violated. They could submit their complaint (claim) to a meeting (committee) of creditors or to law enforcement and other authorized bodies, which, based on the results of consideration of the complaint (claim), could respond by sending a corresponding message to the supervisory authority. The supervisory authority itself did not have the right to initiate an administrative case based on a complaint from a bankruptcy creditor, but at the same time it had the opportunity, having independently identified a violation in the activities of the arbitration manager, to initiate administrative cases and draw up protocols on administrative violations.
The turning point in this practice was the Determination of the Presidium of the Supreme Arbitration Court of the Russian Federation dated April 23, 2013 N 15652/12. The highest instance of the court indicated that “From the analysis of the provisions of Article 28.1 of the Code of Administrative Offenses of the Russian Federation, it follows that the list of reasons for initiating a case of an administrative offense against the arbitration manager is exhaustive; the bankruptcy creditor’s statement cannot be classified as one of such reasons.
In addition, from the provisions of Article 29 of the Federal Law of October 26, 2002 N 127-FZ “On Insolvency (Bankruptcy)” in conjunction with paragraphs 1, 5.5, 5.6, 5.8.2 of the Regulations on the Federal Service for State Registration, Cadastre and Cartography, approved by the resolution Government of the Russian Federation dated 06/01/2009 N 457, it follows that officials of executive authorities authorized to draw up protocols on administrative offenses on the basis of Part 3 of Article 14.13 of the Code of Administrative Offenses of the Russian Federation do not have the right to exercise control (supervision) functions over the activities of arbitration managers directly.
If officials of the bodies of the Federal Service for State Registration, Cadastre and Cartography do not have the authority to control (supervise) the activities of the arbitration managers themselves, a case of an administrative offense provided for in Part 3 of Article 14.13 of the Code of Administrative Offenses of the Russian Federation cannot be initiated even if there is one of the reasons listed in Article 28.1 of the Code of Administrative Offenses of the Russian Federation.
Thus, in the event of failure or improper performance by the arbitration manager of the duties established by the legislation on insolvency (bankruptcy), the creditor is deprived of a real opportunity to initiate an audit of his activities in order for the state to take appropriate measures to influence the offender and prevent the offense in the future.
Thus, the creditor is limited in the effective protection of its property rights.”
This Determination of the Supreme Court became the impetus for the adoption of Federal Law dated July 23, 2013 N 202-FZ, which amended paragraph 1.1 of Article 28 of the Code of Administrative Offences. From this moment on, the supervisory authority acquired the right to initiate administrative proceedings against the Arbitration Manager based on a complaint from a bankruptcy creditor.
The legislator, having changed clause 1.1 of Article 28.1 of the Code of Administrative Offenses, at the same time did not make changes to other norms of legislation concerning the powers of the supervisory body to check the actions of the arbitration manager directly.
Thus, the Federal Law “On Insolvency (Bankruptcy)” in paragraph 11 of Article 2 specifies “the control (supervision) body is a federal executive body authorized by the Government of the Russian Federation to exercise functions of control (supervision) over the activities of self-regulatory organizations of insolvency practitioners”
Those. The basic law regulating the relations between participants in the debtor's bankruptcy process and the arbitration process in a bankruptcy case does not provide for the possibility of the supervisory authority to directly check the activities of the arbitration manager.
It is worth noting the fact that the text of paragraph 11 of Article 2 of the Bankruptcy Law was changed by the legislator by Federal Law dated July 27, 2010 N 219-FZ; in the previously valid wording, the law read as follows:
“a control (supervision) body is a federal executive body authorized by the Government of the Russian Federation to exercise functions of control (supervision) over the activities of arbitration managers and self-regulatory organizations of arbitration managers.”
Those. Previously, the law provided for the right of the supervisory authority to inspect the activities of the Arbitration Manager directly. And later this right of the controlling body was excluded. And so it remains to this day. The Basic Law does not in any way regulate the inspection of the activities of arbitration managers. And only Art. 29 of the Law regulates the verification by the control (supervision) body of compliance with the law by Self-Regulatory Organizations of Arbitration Managers.
Thus, on the official website of the Federal Service for State Registration, Cadastre and Cartography (Rosreestr), its powers in the field of “Control (supervision) over the activities of self-regulatory organizations of insolvency practitioners” are indicated. The powers to directly inspect the activities of insolvency practitioners are not indicated on the official website.
In paragraphs 5.5 and 5.6 of the Regulations “On the Federal Service for State Registration, Cadastre and Cartography”, approved by Decree of the Government of the Russian Federation of June 1, 2009 N 457, the powers of the Federal Service are defined:
5.5. draws up protocols on administrative offenses in the manner established by the legislation of the Russian Federation, considers cases of administrative offenses in the prescribed manner and imposes administrative penalties;
5.6. carries out, in accordance with the established procedure, inspections of the activities of self-regulatory organizations of arbitration managers, self-regulatory organizations of appraisers, self-regulatory organizations of cadastral engineers, the national association of self-regulatory organizations of cadastral engineers;
The Regulations do not provide for powers to inspect the activities of the Arbitration Manager. However, the Regulations further include clause 5.8.2, which gives the Control Body the right to apply in the prescribed manner to the court with an application to bring the arbitration manager, a self-regulatory organization of arbitration managers and (or) its official, a self-regulatory organization of appraisers and their officials to administrative liability.
In this case, a conflict of norms is obvious. On the one hand, the supervisory authority does not have the authority to check the activities of the arbitration manager, and on the other hand, it has the right to go to court with a demand to bring the Arbitration manager to administrative responsibility.
This miscalculation of the legislator was “corrected” by the law enforcement body - the Supreme Arbitration Court. Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 02.25.2014 N 15652/12 in case N A03-2922/2012 “from the cumulative interpretation of clauses 5.5, 5.6, 5.8.2 of the Regulations on the Federal Service for State Registration, Cadastre and Cartography, approved by the Decree of the Government of the Russian Federation dated 01.06 .2009 N 457, it follows that the Federal Service for State Registration, Cadastre and Cartography (including its territorial bodies) is an executive body empowered to draw up a protocol on an administrative offense in relation to arbitration managers, provided for in Part 3 of Article 14.13 of the Code of Administrative Offenses of the Russian Federation, and to apply to the arbitration the court with an application to bring them to administrative responsibility on the basis of the said norm, and, therefore, the right to initiate cases against arbitration managers regarding the specified administrative offense and to conduct an audit of their activities.”
Thus, for the second time, the judicial authorities “rule” the legislator with their interpretation and strengthen the powers of Rosreestr, while at the same time weakening the protection of the rights of Arbitration Managers.
Against this background, Art. looks even more curious. 231 of the Federal Law “On Insolvency (Bankruptcy)”. Clause 3 of this article defines the powers of the control (supervision) body in relation to arbitration managers who are not members of the SRO of arbitration managers. Changes to the Law concerning the registration of the activities of an arbitration manager (previously it was necessary to have the status of an Individual Entrepreneur, later only to be a member of an SRO) were introduced by Law of December 30, 2008 N 296-FZ. The same Law amended Art. 231 of the Law “On Insolvency (Bankruptcy)”. From this moment on, the supervisory authority was given the right to monitor the activities of Arbitration Managers who are not members of the SRO for a year. It is not clear how the powers of the supervisory authority are determined a year after the Law “On Insolvency (Bankruptcy)” as amended by Law dated December 30, 2008 N 296-FZ; there is no practice on this issue.
I dare to suggest that Art. 231 of the Law “On Insolvency (Bankruptcy)” in addition to Art. 29 of this law limited the rights of the supervisory authority to control the direct activities of the Arbitration Managers, but redirected its control functions to the activities of the SRO of the Arbitration Managers.
The explanations given on the page at https://vk.com/page-113887786_52192601 are very interesting in this regard
Conclusion: Regulatory acts of direct effect: The Federal Law “On Insolvency (Bankruptcy)” and the Code of Administrative Offenses do not provide for the powers of the supervisory authority (Rosreestr) to control the activities of insolvency practitioners and carry out administrative measures against them; such power is established only in one by-law - Regulations on the Federal Service for State Registration, Cadastre and Cartography, as well as in the Resolutions of the Presidium of the Supreme Arbitration Court of the Russian Federation on specific cases.
Involvement in subsidiary liability
Subsidiary, or additional liability, protects the rights of creditors. If it is impossible to collect the debt from the main debtor, then subsidiary liability allows it to be collected from an additional debtor. But only on condition that this debtor improperly fulfills the duties assigned to him, thereby violating the rights of the creditor.
There are the following grounds for bringing the arbitration manager to subsidiary liability:
- When a bankruptcy petition is filed at the wrong time.
- When there is a direct connection between the actions of the management company and the ongoing bankruptcy.
Currently, an insolvency administrator can be charged with bankruptcy if his transactions caused significant property damage to creditors. Another reason is the failure to provide or distortion of information about the debtor’s full property.
Time limits for bringing to justice
With regard to bringing an arbitration manager to various types of liability, the rule is that it is impossible to carry out such an action before the entire bankruptcy procedure carried out by such manager is completed. This is due to the fact that until the last day when the decision to liquidate the organization is made, the arbitration manager will do everything to ensure that the performance of his duties assigned by the court is recognized as proper.
If we talk about the bankruptcy trustee, he can be held accountable only after the bankruptcy proceedings have been completed in full. These deadlines (completion of bankruptcy proceedings and bankruptcy proceedings) are not identical, so it is necessary to take this nuance into account when submitting the corresponding application to the arbitration court or self-regulatory organization. If you submit an application for an arbitration manager after the end of bankruptcy proceedings, consideration of such an application will be refused in accordance with the norms of current legislation.
When filing an application to hold the insolvency administrator accountable, you should also remember that some evidence has a limited storage period (for example, for some postal items there is a storage rule for six months, after which the data about them is destroyed, which makes it impossible to attract such given as evidence of improper performance by the arbitration manager of the duties assigned to him by the court).
In some cases, it is possible to reinstate missed deadlines for filing an application for prosecution. However, such a rule can only apply if the applicant has strong evidence of the need to bring the insolvency practitioner to one of the types of liability.
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