The Supreme Court Approved an Amicable Settlement in a Dispute over the Reservation of Funds by a Bankruptcy Trustee
The Supreme Court of the Russian Federation, in case No. A56-58832/2019, approved an amicable settlement in a separate dispute concerning the recognition of unlawful inaction by a bankruptcy trustee, expressed in the failure to reserve and return monetary funds following the reversal of enforcement of a judicial act. The Economic Chamber found it permissible for the parties to resolve the conflict directly at the cassation stage of the proceedings.
The core of the dispute was that the bankruptcy trustee had recovered RUB 2.6 million from a former employee of the debtor as consequences of the invalidity of an employment contract. Subsequently, the judicial act was set aside, and the court ordered a reversal of its enforcement, obliging the debtor to return the withdrawn amount. However, the trustee did not reserve the funds, and by the time the employee applied for their return, the monies had in fact already been distributed among the creditors. This circumstance served as the basis for a complaint challenging the trustee’s inaction and seeking its recognition as unlawful.
During the consideration of the cassation appeal, the parties submitted an amicable settlement, under the terms of which the applicant acknowledged the absence of claims against the trustee within the scope of the arguments raised in the appeal, while the trustee confirmed the employee’s claims as established by decisions of the courts of general jurisdiction. Having assessed the settlement, the Supreme Court concluded that it did not violate the rights or legitimate interests of other persons and approved it, thereby terminating the dispute.
This position of the Supreme Court demonstrates a flexible approach to the resolution of separate disputes in bankruptcy cases and underscores the possibility of using the institution of an amicable settlement as a tool for procedural economy and conflict reduction, including at the level of the highest judicial instances.
