Cross-border insolvency rules enable creditors of those who have been declared bankrupt abroad to pursue their claims against assets in this country. In a textbook example of those rules in operation, the High Court ordered possession and sale of a London flat worth up to £11.5 million.
After a Russian national was made bankrupt in his homeland, English proceedings were launched on behalf of his creditors, who claimed to be owed over £87 million. His bankruptcy was subsequently formally recognised in this country under the Cross-Border Insolvency Regulations 2006. An official was appointed to gather in and realise his English assets for his creditors’ benefit.
The flat was registered in the joint names of the bankrupt and his wife. He asserted, however, that he had gifted all his property and assets outside Russia to his wife and adult children. On that basis, he contended that he had no beneficial interest in the flat, no part of which, therefore, fell into his bankrupt estate.
Rejecting that argument, however, the Court noted that, in previous proceedings, the bankrupt had signed a witness statement in which he confirmed that he held a 50 per cent interest in the flat. He had provided no satisfactory or believable explanation for his subsequent assertion that he had no such interest.
In granting the possession and sale order, the Court found that no real weight could be attached to the couple’s bare assertions that the flat was beneficially owned by the wife alone. Documentary and other evidence on which they relied fell very far short of displacing the presumption that the flat’s beneficial ownership was accurately reflected in their registered equal shares.