Accessibility of English bankruptcy to foreign debtors—JSC Bank of Moscow v Kekhman

Accessibility of English bankruptcy to foreign debtors—JSC Bank of Moscow v Kekhman

When do English courts have discretion to annul an order in international bankruptcy cases? Michael Swainston QC at Brick Court Chambers examines the decision in JSC Bank of Moscow v Kekhman and others, a leading judgment on the accessibility of English bankruptcy to foreign debtors.

Original news

JSC Bank of Moscow v Kekhman and others [2015] EWHC 396 (Ch), [2015] All ER (D) 288 (Feb)

The Chancery Division considered an appeal against a decision of the Chief Registrar, in which he declined to annul a bankruptcy order made against K, a Russian businessman. The court held that, while the Chief Registrar had erred in principle in his approach to his jurisdiction to annul the bankruptcy order, the court had not had a discretion to annul the order, and the appeal would be dismissed.

Briefly, what was the background to this case?

Mr Vladimir Kekhman has been a very successful entrepreneur in Russia, building a huge fruit importation business under JFC Group, a BVI company, with subsidiaries in Russia, the BVI, Cyprus, Luxembourg, Panama, Costa Rica and Ecuador. On his case, he pulled back from this business when he began his subsequent career as head of the Mikhailovsky Theatre in St Petersburg, and left the running of it to his partners, Mr Afanasiev and Mrs Zakharova.

Mr Kekhman subsequently enjoyed great success in the running of the Mikhailovsky which has been restored to the first rank of international arts venues.

Meanwhile, however, the fruit business failed. JFC Russia is subject to a Russian bankruptcy process and Mr Kekhman has been exposed to multiple liabilities, including substantial English law liabilities, as a guarantor of loans to JFC Group companies.

Russian law does not have a personal bankruptcy regime for individuals who are not registered entrepreneurs. Mr Kekhman therefore sought to invoke English jurisdiction and English bankruptcy law to secure a transparent administration of his international affairs and

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.