Determining the debts of insolvent estates in foreign currencies

Determining the debts of insolvent estates in foreign currencies

How is interest upon provable debts to be calculated, and debts in foreign currencies exchanged into sterling by trustees of insolvent estates? Donald Lilly of 4 Stone Buildings, says a recent ruling shows the importance of construing all insolvency law enactments within their context, and not in isolation.

Original news

Re Estate of Platon Elenin (aka Boris Abramovich Berezovsky); Subnom Lockston Group Inc v Wood [2015] EWHC 2962 (Ch), [2015] All ER (D) 231 (Oct)

The Chancery Division, in dismissing the applicant’s challenge to the appointment of trustees to the insolvent estate of Boris Berezovsky, held that the date of the debtor’s death was the date at which the assets comprising the insolvent estate were identified, and as at which the debts and liabilities were identified and quantified. That included the conversion of foreign currency debts into sterling and the date up to which interest might be proved, and after which statutory interest ran.

What was the background to the application?

Platon Elenin (formerly known as Boris Berezovsky) died in March 2013. In late 2014, the estate’s general administrators, Nick Wood and Kevin Hellard of Grant Thornton, presented a petition to place the estate into insolvent administration. An insolvency administration order (IAO) was made in January 2015.

At the first meeting of creditors, Messrs Wood and Hellard, along with another partner from Grant Thornton, Mike Leeds, were proposed to be trustees of the insolvent estate. Competing candidates from KPMG (the KPMG nominees) were also proposed. The chairman of that meeting calculated the debts of creditors for the purposes of voting on the basis that interest on those debts was provable only up to the date of Mr Berezovsky’s death in 2013. He also used the date of death as the relevant time to convert debts in foreign currencies into sterling. On that basis, the votes of creditors supporting Messrs Wood, Hellard and Leeds

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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.