Provisional relief unnecessary once main foreign proceedings recognised

A provisional relief order had been made under the Cross-Border Insolvency Regulations 2006 (CIBR 2006), effectively freezing a Russian bankrupt’s assets worldwide.

Following the recognition of the Russian bankruptcy proceedings as main foreign proceedings under CIBR 2006, the Russian insolvency office holder applied to extend the provisional relief order.

The court held that the extension was unnecessary. Upon recognition of main foreign proceedings, a foreign insolvency office holder is effectively placed in the same position as a domestic office holder. The provisional suspension of dealings in the bankrupt's assets had been overtaken by the automatic effects of recognition: namely a permanent suspension, supplemented by the extensive powers in English insolvency legislation (including provisions mandating the bankrupt's co-operation, court supervision and arrest). Therefore unless there were exceptional reasons, a freezing order continuing against the debtor was therefore not required or justified.

The court also held that there was no jurisdiction in this case to make or extend a freezing order under section 25 of the Civil Jurisdiction and Judgments Act 1982. Such an order must be ancillary to substantive foreign proceedings. The court held that substantive proceedings meant proceedings to vindicate private law rights in a litigation context. These differed from collective, court-supervised insolvency proceedings, as in this case.

Protasov v Derev [2021] EWHC 392 (Ch) (24 February 2021)

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