The administrators negotiated a sale of the company’s shares to UMMC-Invest, a Russian creditor. It then sought directions from the court under Paragraph 63 Sch B1 that the administrators had liberty to conclude that, given the potential risk, transaction itself may breach the sanctions regime.
There was insufficient time for the joint administrators to obtain a licence from the Office of Financial Sanctions Implementation and, if the transaction did not conclude, it was likely enforcement action would be taken in Russia to the detriment of creditors.
Under this paragraph the court can “bless” a proposed exercise of discretion and it was prepared to do that here – it accepted the administrators had considered all of the available options and had reached a rational conclusion that the transaction amounted to the best course for all of the stakeholders (indeed it appeared the only option).
The administrators also addressed the court on the sanctions regime. The court accepted that, while the administrators could not completely rule out that a breach of the sanctions regime might occur (because no protection from deception can be entirely flawless), they had taken steps to satisfy themselves that there would not be any breach or benefit from that sale flowing to a sanctioned individual. The court accepted on the evidence that the practical risk of any breach of the sanctions regime would be low.
Re Petropavlovsk Plc [2022] EWHC 2097 (Ch)