Lyubov Andreevna Kireeva (Trustee and Bankruptcy Manager in Russia of Georgy Ivanovich Bedzhamov) v Georgy Ivanovich Bedzhamov
| Jurisdiction | England & Wales |
| Judge | Mr Justice Snowden |
| Judgment Date | 13 August 2021 |
| Neutral Citation | [2021] EWHC 2281 (Ch) |
| Docket Number | Case No: BR-2021-000044 |
| Court | Chancery Division |
[2021] EWHC 2281 (Ch)
Mr Justice Snowden
Case No: BR-2021-000044
BL-2018-002691
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTER OF GEORGY IVANOVICH BEDZHAMOV
Royal Courts of Justice
Rolls Building, Fetter Lane
London, EC4A 1NL
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Stephen Davies QC and William Willson (instructed by DCQ Legal) for Ms. Kireeva
Justin Fenwick QC and Stephen Robins (instructed by Mishcon de Reya LLP) for Mr. Bedzhamov Vneshprombank LLC was not represented
Hearing dates: 14, 16 and 19 April 2021
Approved Judgment
There are two applications before the Court, each of which has been issued by Ms Lyubov Andreevna Kireeva, who is the trustee in bankruptcy appointed in Russia (the “Trustee”) of the Respondent, Mr Georgy Bedzhamov (“Mr Bedzhamov”).
The primary application is dated 19 February 2021 and seeks recognition at common law in this jurisdiction of the Trustee's appointment in Russia on 2 July 2018 (the “Recognition Application”). The Recognition Application states that the Trustee wishes to take control of Mr Bedzhamov's property and assets in the UK for the benefit of all of his creditors. To that end the application seeks ancillary “orders for the entrustment” of Mr Bedzhamov's property and assets in this jurisdiction. I shall return to consider what precisely that might mean or involve later in the judgment, but for present purposes it can be taken to include orders giving the Trustee the right to take possession and sell such assets, and to remit the proceeds to be dealt with in the bankruptcy in Russia. The only assets identified by name in the application notice are two properties in London collectively referred to as the “Belgrave Square Property”.
The second application is dated 16 March 2021 and is made in existing proceedings between Vneshprombank LLC (the “Bank”) and Mr Bedzhamov (the “UK Proceedings”). The Trustee seeks an order as a non-party under CPR rule 40.9 setting aside paragraph 1 of an order made by Falk J dated 5 March 2021 (the “March Order”) (the “Set Aside Application”). The March Order, relevantly, varied the terms of a worldwide freezing order originally made by Arnold J on 27 March 2019 in the sum of £1.34 billion in the UK Proceedings and which was continued by Fancourt J on 10 April 2019 (the “WFO”). The variation to the WFO ordered by Falk J had the effect of permitting Mr Bedzhamov to sell the Belgrave Square Property and to use the proceeds of sale to pay his accrued and anticipated living expenses, his legal fees in connection with the defence of the UK Proceedings, and other disbursements. The UK Proceedings have been listed for trial over 40 days commencing in January 2022.
Although the March Order was made in the UK Proceedings to which the Bank is a party, the Bank did not make submissions in respect of the applications and was not represented by counsel at the hearing before me. I will return below to the relevance of the Bank's non-participation for the disposal of these applications.
The parties
The Trustee is a Russian insolvency practitioner and arbitrazh manager based in Moscow, Russia. The title of arbitrazh manager is a professional qualification required to act as a trustee in bankruptcy in Russia.
Mr Bedzhamov is a Russian citizen domiciled in England and Wales, where he has been living since 2017. He is the subject of ongoing criminal and civil proceedings in Russia in connection with his alleged involvement in a fraud perpetrated against the Bank. He is also the first defendant in the UK Proceedings, in which the Bank seeks damages arising from the same alleged fraud. Mr Bedzhamov denies all of the allegations made against him.
The Bank was incorporated on 17 July 1995 in Russia. On 18 December 2015, the Central Bank of Russia appointed provisional administrators over the Bank. On 14 March 2016, the Bank was declared bankrupt by the Moscow Arbitrazh Court, and the Deposit Insurance Agency (the “DIA”) was appointed to act as its receiver and liquidator. The DIA is a state corporation which, among other things, acts as a corporate receiver and liquidator of banks under Russian law.
Claims against Mr Bedzhamov in Russia
Mr Bedzhamov was the subject of two bankruptcy petitions (applications) in Russia arising from two separate debts. The first bankruptcy petition was presented by the Bank. The second bankruptcy petition was presented by another Russian Bank, VTB 24 Bank (“VTB 24”). Before describing the proceedings in those bankruptcy petitions, it is necessary to summarise the underlying debts upon which the petitions were founded.
The Bank's claim in Russia
On 20 June 2016, the Bank commenced a claim against Mr Bedzhamov in the Khamovniki District Court of Moscow for unjust enrichment, seeking the Russian rouble equivalent of approximately £40 million said to be owed to the Bank pursuant to 42 credit agreements entered into between Mr Bedzhamov and the Bank prior to its insolvency.
On 16 August 2016, the Khamovniki District Court entered judgment against Mr Bedzhamov in the amount of RUB 3,368,065,366 (the “Unjust Enrichment Judgment”). On 27 December 2016, Mr Bedzhamov lodged an appeal against the Unjust Enrichment Judgment on the grounds, among others, that the proceedings were contrary to the applicable Russian procedural rules. On 30 June 2017, the Moscow City Court dismissed Mr Bedzhamov's appeal and upheld the Unjust Enrichment Judgment. It is Mr Bedzhamov's position that the appeal was itself procedurally irregular and contrary to natural justice, essentially because it was decided on what he says was inadmissible evidence.
Some two years later, on 28 June 2019, Mr Bedzhamov lodged an application to both the Khamovniki District Court and the Moscow City Court to set aside the Unjust Enrichment Judgment. The basis of that application was said to be the discovery by Mr Bedzhamov of new evidence in the form of a report prepared by the DIA dated 22 December 2016 (the “DIA Report”). According to the evidence of Mr Sergey Belchich, Mr Bedzhamov's legal adviser in Russia, the DIA Report concluded that about 2 billion roubles of the 3 billion roubles upon which the Unjust Enrichment Judgment was founded had not actually been received by Mr Bedzhamov, and moreover that those sums were the subject of fictitious loan documents created to balance the Bank's books in relation to monies missing from cash deposits of certain other customers of the Bank.
There followed a dispute between Mr Bedzhamov and the Bank (and the DIA) as to the ability of Mr Bedzhamov to rely upon the DIA Report for the purposes of his application to show that he had not in fact received a significant proportion of the monies upon which the Unjust Enrichment Judgment was founded. Mr Bedzhamov's application to rely upon the DIA Report and to set aside the Unjust Enrichment Judgment was opposed by the DIA, and, on 18 November 2019, it was rejected.
On 3 December 2019, Mr Bedzhamov filed an appeal against the decision to reject his application. That appeal was also dismissed on 18 February 2020. Mr Bedzhamov again appealed, in April 2020, to the Second Court of Cassation. On 20 July 2020, Mr Bedzhamov was notified by the Second Court of Cassation that his appeal had not been successful.
Accordingly, as matters stand, the position is that the Unjust Enrichment Judgment remains outstanding and unsatisfied in Russia, and Mr Bedzhamov's numerous attempts to overturn the judgment have been unsuccessful, with no apparent prospect of any further appeals. Nonetheless, Mr Bedzhamov's position before me, as articulated in the evidence of Mr Belchich, remains that the Unjust Enrichment Judgment was obtained improperly and is being maintained by fraud, namely the wrongful suppression by the Bank, at the instigation of the DIA, of the matters contained in the DIA Report.
Although the Bank petitioned for Mr Bedzhamov's bankruptcy based upon the unsatisfied Unjust Enrichment Judgment debt, this was not in fact the basis upon which Mr Bedzhamov was ultimately declared bankrupt in Russia.
VTB 24's claim in Russia
On 23 October 2015, VTB 24 made a loan to Mr Bedzhamov's sister, Larissa Ivanovna Markus, for a principal amount of RUB 320,441,000. Ms Markus failed to meet her obligations under the loan and VTB 24 subsequently sought to enforce the debt against her in the Meshanskiy District Court. Ms Markus is herself subject to bankruptcy proceedings in Russia and is presently serving a prison sentence in connection with the same fraud against the Bank in which Mr Bedzhamov is alleged to have participated.
The role of Mr Bedzhamov in relation to the loan was (and continues to be) a matter of dispute between the parties. Mr Belchich's evidence was that Mr Bedzhamov offered security to VTB 24 in respect of the loan in the form of a pledge over certain assets in Russia (namely, three plots of land in Moscow). The Trustee's evidence was that, in addition to the security granted over the three plots of land, Mr Bedzhamov also provided a limited personal guarantee. Mr Belchich's evidence made clear that Mr Bedzhamov does not accept the validity of the personal guarantee and...
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