Rozhkov v Markus

Recognition of foreign insolvency proceedings under the Cross-Border Insolvency Regulations 2006 is mandatory once the statutory jurisdictional requirements are satisfied. The court must determine whether the proceedings qualify as a foreign proceeding, whether the applicant is a foreign representative, whether the required documents and information have been supplied, and whether the application is made to the appropriate court. The centre of main interests is assessed on the evidence, subject to the applicable presumption. Recognition may be refused on public policy grounds only where it would be manifestly contrary to the public policy of Great Britain. The court may grant ancillary relief, including disclosure orders, where necessary to protect the debtor’s assets and further the creditors’ interests.

The applicant was the trustee and financial administrator appointed in Russian personal bankruptcy proceedings concerning the respondent. He sought recognition of those proceedings in England under the Cross-Border Insolvency Regulations 2006, together with finalisation of an interim preservation order.

He also sought information from two firms of solicitors involved in the sale of an English property belonging to the respondent. The firms had declined to provide information voluntarily but adopted a neutral stance on the application. The central issues were whether the Russian proceedings satisfied the statutory conditions for recognition and whether disclosure was necessary to protect the debtor’s assets and advance the creditors’ interests.

1. The court granted recognition of the Russian bankruptcy proceedings and made the preservation order final. Under Article 17 of Schedule 1 to the Cross-Border Insolvency Regulations 2006, recognition was mandatory once the jurisdictional requirements were satisfied.

2. The Russian proceedings were a foreign proceeding within Article 2(i). They were collective judicial proceedings conducted under insolvency legislation, subject to the control and supervision of a foreign court, and directed to reorganisation or liquidation. The unsuccessful debt-restructuring attempt meant that the proceedings were, in substance, a liquidation.

3. The applicant was a foreign representative for the purposes of Article 17(1)(b). The requirements concerning the recognition application and supporting material under Articles 17(1)(c) and 15(2) and (3) were also met. The application had been made to the appropriate court as required by Article 17(1)(d) and Article 4.

4. The respondent’s centre of main interests was in Russia. The evidence supported the general presumption arising from her habitual residence and Russian citizenship. Nothing displaced that presumption.

5. There was no basis for refusing recognition under Article 6. Recognition would not be manifestly contrary to the public policy of Great Britain.

6. The disclosure application under Article 21(1)(d), alternatively Article 21(1)(g), was granted. Information concerning the sale proceeds was clearly necessary to protect the debtor’s assets and further the creditors’ interests. The circumstances were a paradigm case for exercising the court’s discretion in favour of the foreign representative.