Arina Merkureva has explained to Delovoy Peterburg newspaper why after the death of one of the founders, a business can be declared bankrupt and its co-founders can be held subsidiary liability

RostFinance Bank is seeking to recover RUB 23 m. from a businessman who died in 2022. The businessman acted as a guarantor on a loan to a business in which he was a co-founder and pledged his flat and land plot as security. At the bank’s request, the Commercial  Court of St Petersburg and the Leningrad Region declared the deceased citizen bankrupt and instituted a procedure for the realisation of his property. In parallel, RostFinance Bank initiated the business bankruptcy. However, if the bank is satisfied with the seizure of the deceased loan guarantor’s real estate, the company’s debt will be considered paid.

‘Most likely, the main problem was the refusal of the heirs from the inheritance and the accompanying inaction of the co-founders themselves. The directors were never changed, misrepresentations were not eliminated, and other possible heirs were not sought. The companies were essentially abandoned,’ Arina Merkureva, Associate of Private Wealth Practice at Maxima Legal, commented on the situation specially for Delovoy Peterburg newspaper. According to the expert, the co-founders of a business are generally not liable for the debts of the business with their personal property, but may bear subsidiary liability, which comes if the company is declared bankrupt and it does not have enough property to repay its debts. In such a case, the participants may be brought to additional liability, which is not limited by the amount of the authorised capital.

To read the full article (in Russian), please, see Delovoy Peterburg newspaper`s website >>>