Re The Estate of Platon Elenin (aka Boris Berezovsky); Lockston Group Inc v Wood

Bankruptcy – Insolvency Administration Order – Administration of Insolvent Estates of Deceased Persons Order 1986 – s.322 Insolvency Act 1986 – rules 6.111 and 6.113 Insolvency Rules 1986 – currency conversion – quantification of interest – proof for purposes of voting

Boris Berezovsky died on 23 March 2013. On 29 April 2013 Nicholas Wood and Kevin Hellard of Grant Thornton were appointed as receivers of his estate. They were later appointed general administrators of the estate on 10 April 2014. Notwithstanding the once extraordinary wealth of the Deceased, the estate was insolvent.

On 30 October 2014, the General Administrators applied for an Insolvency Administration Order (“IAO”) under the Administration of Insolvent Estates of Deceased Persons Order 1986 and their own appointment as trustees in bankruptcy. On the hearing of the petition on 25 January 2015, Morgan J made the IAO but directed that a creditors’ meeting take place at which the creditors could appoint the trustees in bankruptcy. Some creditors supported the appointment of the General Administrators (and a further colleague) while others preferred members of KPMG.

At the meeting, the chairman converted debts in foreign currency at the date of the Deceased’s death and allowed interest to be proved only to the date of death and not the date of the IAO. The issue was important as, between the date of death and the making of the IAO, the value of the rouble (in which debts claimed by Aeroflot and the Government of Samara were denominated) had collapsed. The difference was decisive in the appointment of trustees.

The 1986 Order provides a general modification to the Act that “bankruptcy order” be altered to read “IAO”, unless the context otherwise requires. The rules are “modified accordingly”. The court held that the context required that section 322(2) of the Insolvency Act 1986, which otherwise provides for interest to be provable to the date of the bankruptcy order, should be modified to refer to the date of death and not the date of the IAO. This was necessary to maintain one consistent reference date for both identification and quantification of debts, which would also be applicable to insolvent estates administered outside formal bankruptcy. For similar reasons, rules 6.111and 6.113 of the Insolvency Rules 1986 should also be read as referring to the date of death.

This case highlights the extent to which the court will construe statutory material in such a way as to ensure consistency in the pari passu principle across insolvency regimes.