Case summary
An individual (the principal) contacted our client with a delicate request to help him in closing accounts and deposits and to deliver ready cash to him. For this purpose he issued a power of attorney to our client. The client fulfilled the assignment given by his principal in full compliance with the principal’s will. Shortly thereafter the principal died. 3 years later bankruptcy proceedings against the principal’s estate were initiated. In another 1.5 years the financial receiver petitioned the court to recognize the client’s (attorney’s) acts an invalid transaction and obligate him to return to the estate of the deceased person the money that had been withdrawn from his accounts and delivered to the late principal. The financial receiver was of the opinion that the attorney had not delivered the money to the principal and his actions prejudiced the principal’s creditors.
Comments
Now such situations are not uncommon in judicial practice. We see more and more disputes within the context of bankruptcy proceedings where bankruptcy (financial) receivers and creditors try to have attorneys’ acts recognized in court as harmful, while attorneys as a result of this become (sometimes unjustly) obligated to return to the bankruptcy estate property that is not and has never been owned by them.
The case at hand could have become one of such cases and it was important for AGP to win it and mold a correct legal precedent.
Case outcome
A team of attorneys-at-law and lawyers of our firm has won the case before courts of all three levels.
Despite of the lack of written evidence, we managed to prove that the attorney did hand over the money to his principal.
Furthermore, our team has successfully managed to obtain a conclusion of the courts which is important for the development of judicial practice: an attorney acting by power of attorney is not obligated to establish a reasonable economic purpose of withdrawal of money by the principal. The courts agreed with AGP attorneys-at-law and lawyers that verification of reasons for withdrawal of money is not a conduct expected from an attorney as a bona fide participant in civil transactions.
A separate discussion arose regarding whether the principal had creditors and, if so, whether their interests could be affected.
In this regard the courts also agreed with the attorneys-at-law and lawyers of the firm that at the time of withdrawal of the money the principal did not have outstanding obligations to creditors.
The courts also recognized (which is a rare occurrence) that, taking into account all the facts and circumstances, the financial receiver chose an improper method of protection.
AGP team
The project was run by Attorney-at-Law Dmitry Yakushev and Lawyers Olesya Emkuzheva and Ruslan Dzhantemirov.
