Subsidiary Liability: Problems and Prospects

In classical doctrine, subsidiary liability is a type of third party liability for the debtor’s obligations; however, in connection with the reform of bankruptcy legislation, the institution of subsidiary liability has recently acquired the form of a tort obligation of the controlling debtor. Current research of the Institute of subsidiary liability in connection with the introduction of amendments to the law on bankruptcy, which entailed an increase in the number of satisfied requirements for bringing controlling debtors to subsidiary liability. Amendments to the legislation, in turn, was due to the need to curb the actions of persons controlling the debtor, unlawfully using the principles of limited liability and property isolation of participants and the corporation. The study aimed to study the legal nature of the institution of subsidiary responsibility, identify the problem of applying the doctrine in practice, and develop practical proposals for the development of the institution of subsidiary responsibility of the controlling debtor. According to the results of the study, specific proposals were formulated on promising areas of practical application of the institute, ways to improve the bankruptcy law were identified, and a number of practical recommendations were proposed on how to balance the interests of participants in bankruptcy procedures.