Key point

The English Courts have refused to discharge a bankruptcy order made on the basis of the individual's presence in the jurisdiction for one day only, where Russian asset freezing orders had been broken, the Court misled and in the knowledge recognition of a UK bankruptcy order in Russia was unlikely.

The facts

K was made bankrupt in 2012. The English Court exercised its jurisdiction to make the order based on K's presence in the UK for one day. Russia has no equivalent to the bankruptcy regime available to none business debtors in the UK. The Court heard evidence at the hearing that it was possible the order would be recognized in Russia. Later evidence suggested that was unlikely, putting into question the utility of the bankruptcy order. Certain creditors of K sought an annulment of the order.

The decision

The Court refused to annul the order. Despite being misled in certain respects at the original hearing by K who had breached Russian asset freezing orders and by the expert evidence on recognition the order still served a useful purpose in allowing the collection of and investigation as to the extent of the assets of K.

Comment

The Court made it clear that it did not regard all forum shopping as objectionable. It was prepared to allow the bankruptcy to continue despite admitted failures in the evidence presented at the original hearing. The decision also goes some way to align the satisfaction of jurisdictional requirements for bankruptcy to the analogous exercise of jurisdiction in the numerous scheme of arrangement cases involving overseas companies.

JSC Bank of Moscow v Kekhman [2014]