Millhouse Capital UK Ltd & Anor v Sibir Energy Plc & Ors

The court has jurisdiction under Insolvency Act 1986 to wind up an unregistered foreign company in the statutory circumstances. Its exercise is discretionary and requires a sufficient connection with England and Wales, a reasonable possibility of benefit to the petitioners, and persons interested in distribution who are subject to the court’s jurisdiction.

A substantial English chose in action may provide the necessary connection. The benefit of an English liquidation need not be unobtainable by other means, although available alternatives remain relevant to discretion. A court-appointed English insolvency practitioner may provide a legitimate benefit where cross-border litigation requires stable English supervision.

On a without-notice application for a provisional liquidator, full and fair disclosure extends to material matters bearing on the claim, jurisdiction and asserted urgency. Serious non-disclosure may justify setting aside the appointment and depriving the applicant of any advantage obtained through it.

Millhouse Capital UK Ltd and Mr Abramovich applied to set aside the appointment of Mr Cork as provisional liquidator of the Russian company Yugraneft. They also sought a declaration that the court should decline insolvency jurisdiction and dismissal of a winding-up petition presented by Sibir Energy Plc and OAO Moscow Oil & Gas Company.

Yugraneft was already in liquidation in Russia. The petitioners contended that an English winding up would enable an English office-holder to pursue a substantial Commercial Court claim against Millhouse and Mr Abramovich. The applicants contended that the Russian liquidator could commence that claim without English insolvency proceedings and that the provisional-liquidator appointment had been obtained without full disclosure.

The court had already dismissed the Commercial Court proceedings in an earlier judgment. It therefore dismissed the winding-up petition, while determining the jurisdictional and non-disclosure issues on the contrary assumption that those proceedings had survived.

1. The winding-up petition was dismissed. The court had already dismissed the associated Commercial Court proceedings. The petitioners accepted that this required dismissal of the petition. The provisional liquidator’s appointment would consequently terminate under the Insolvency Rules.

2. On the assumed alternative basis that the Commercial Court claim remained viable, Yugraneft was an unregistered company which could be wound up under Insolvency Act 1986. The statutory power remained discretionary. The court accepted the three core requirements: a sufficient connection with England and Wales, a reasonable possibility of benefit from the order, and interested persons subject to the court’s jurisdiction.

3. The asserted US$2 billion claim against an English company and against Mr Abramovich was an asset providing a sufficient English connection. An English asset does not invariably suffice: it may be too slight or tenuous. Here, however, the claim was substantial and the defendants would be subject to the English court’s jurisdiction.

4. The requirement of benefit did not make winding up a remedy of last resort. The petitioners had to show some benefit from the order, but not that the same or a similar benefit could not be achieved otherwise. Appointment of an English licensed insolvency practitioner, accountable to the English court and able to supervise complex English litigation as an ancillary liquidation, was a legitimate prospective benefit. The support of the Russian liquidator, the principal creditor and a substantial shareholder strongly favoured exercise of the discretion.

5. The petitioners nevertheless owed a full and fair duty of disclosure on their without-notice application for a provisional liquidator. They should have disclosed material contrary evidence concerning Mr Abramovich’s residence, the Russian criminal investigation and the availability of civil recovery despite alleged fraud. The omissions were substantial and bore directly on the claim and asserted urgency.

6. But for the earlier dismissal of the Commercial Court claim, the court would have set aside the provisional-liquidator appointment and dismissed that claim. Proceedings begun under an appointment procured by significant non-disclosure were an abuse of process. Neither the statutory validity of the provisional liquidator’s acts nor the Russian liquidator’s later approval prevented the court from depriving the petitioners of the benefit obtained through the defective without-notice order.

not stated in the judgment.