The broker went into special administration and its administrators applied to court for approval of the sale of various Russian securities owned by the broker to a large unsecured creditor, in return for a waiver of a proportion of the creditor’s claim. That application was opposed by another creditor who had made an opposing bid.
The broker went into special administration shortly after Russia invaded Ukraine and its assets traded on Russian exchanges were frozen under the sanctions that were subsequently imposed. As a result of these sanctions, the Russian assets could only be sold to a Russian buyer and the administrators could not sell to a Russian buyer who was subject to sanctions itself.
This very much limited the market for those assets, leaving them of limited value, so the creditor offered to buy the assets in return for a waiver of claims calculated to put the other creditors in no worse position. Another creditor made an alternative bid and opposed the application.
The judge considered the terms of the offers and the law relating to the directions requested by the administrators and approved the sale. The judge dismissed the opposing creditor’s suggestion that the administrators had, in some way, surrendered their discretion to the court and agreed that it was a proper application to make.
The judge also found that the administrators had the statutory powers to conclude the sale, it was a rational and honest decision to enter into the transaction and the transaction did not breach the various international sanctions in place.
Re Sova Capital  EWHC 452 (Ch)
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