Servis-Terminal LLC v Valeriy Ernestovich Drelle

Where an appeal against a bankruptcy order succeeds on jurisdictional grounds, the order should be set aside and the bankruptcy petition dismissed. The setting aside need not be made conditional on first resolving the remuneration and expenses of trustees appointed under the order. Those interests may instead be protected by appropriate undertakings or other interim safeguards, while the remuneration issue is determined separately. Costs may reflect success at appellate stages while making no order for costs concerning the original statutory-demand and petition proceedings where the successful point was raised only later. Consequential orders may include removal of the trustees, restoration of the estate, directions concerning money held in court, a stay to permit a further appeal, and refusal of permission to appeal.

Servis-Terminal LLC presented a bankruptcy petition against Valeriy Ernestovich Drelle. The High Court proceedings included hearings before ICC Judge Burton and a decision by Richards J, reported at [2024] EWHC 521 (Ch). This Court had previously allowed Mr Drelle’s appeal, set aside the bankruptcy order and dismissed the petition.

The present judgment concerned consequential matters, including costs, the position and remuneration of the trustees in bankruptcy, money held in court, permission to appeal to the Supreme Court, and a stay. The central issue was how the trustees’ interests should be protected after the bankruptcy order had been set aside.

1. Disposition. The Court confirmed that the appeal had been allowed, the bankruptcy order set aside and the bankruptcy petition dismissed. The trustees in bankruptcy were removed from office forthwith and the estate reverted to Mr Drelle.
2. Trustees’ protection. The trustees argued that setting aside the bankruptcy order should be conditional upon resolution of their remuneration and expenses. The Court expressed doubt that such a condition could be legitimate where an appeal against the bankruptcy order had succeeded on jurisdictional grounds. It was sufficient instead for Mr Drelle to undertake not to dispose of or otherwise deal with specified properties until the remuneration hearing or further order. A High Court Judge was directed to determine the trustees’ application for remuneration.
3. Costs. Mr Drelle had succeeded in this Court and was also entitled to have succeeded before Richards J. The successful point had not been raised before ICC Judge Burton, however. The Court therefore ordered the Company to pay Mr Drelle’s costs of both appeals, including a payment on account of £300,000, but made no order for costs relating to the application to set aside the statutory demand or the bankruptcy petition, including the earlier hearings.
4. Other consequential orders. Money in court was to be used to meet the Company’s liabilities for costs and otherwise returned to the Company, subject to approval from the Office of Financial Sanctions Implementation. Permission to appeal to the Supreme Court was refused, with a stay to allow the Company to seek permission from the Supreme Court itself and, if permission were granted, pending determination of that appeal. Lords Justices Popplewell and Snowden agreed.

• Court of Appeal (Civil Division): The Court had previously allowed the appeal, set aside the bankruptcy order and dismissed the bankruptcy petition. In this consequential judgment, it made orders concerning the trustees, costs, money held in court, permission to appeal and a stay.
• High Court of Justice, Business and Property Courts, Insolvency and Companies List: Decision of Richards J reported at [2024] EWHC 521 (Ch), from which the appeal was brought.