JSC VTB Bank v Skurikhin & Ors

By an application notice issued by the Claimant (to whom I will refer as “VTB”) on 16 December 2014, VTB seeks the appointment pursuant to s. 37 of the Senior Courts Act 1981 of receivers over the LLP membership interests in the Second Defendant (“Pikeville”), by way of equitable execution.

VTB seeks the appointment of receivers to enforce money judgments which it has obtained against the First Defendant (“Mr Skurikhin”) by orders of this Court dated 7 March 2014 and 14 November 2014. The sterling equivalent of the rouble sums for which those judgments were made is in the region of £15 million.

The judgments in question were obtained by VTB by way of enforcement in this jurisdiction of judgments obtained by VTB against Mr Skurikhin in the Russian courts for sums due pursuant to guarantees given by Mr Skurikhin to VTB as security for loans granted by VTB to companies in the SAHO group in Russia, of which Mr Skurikhin is the Chairman.

The LLP membership interests in Pikeville, which is incorporated in this jurisdiction, are registered in the names of the First, Second and Third Respondents (respectively “Mr Meier”, “Mr Lerch” and “Crown”). There is and has been no issue that the registered LLP members hold those membership interests as nominees. It is VTB’s case that Mr Skurikhin is or should be regarded as the beneficial owner of those LLP membership interests. By contrast, Mr Skurikhin, Mr Meier, Mr Lerch and Pikeville have previously asserted in these proceedings that the true beneficial owner of the LLP membership interests in Pikeville is the Fourth Respondent (“the Berenger Foundation”), which is domiciled in Liechtenstein. They have contended that Mr Skurikhin is no more than a discretionary beneficiary of the Berenger Foundation, and as such cannot be treated as the beneficial owner of the assets of the Berenger Foundation.

Pikeville owns three valuable properties in Italy. The evidence suggests that they are worth in the region of €17 million. VTB’s application is for the Court to appoint equitable receivers over the membership shares in Pikeville so that the receivers may effectively exercise the powers of the members of Pikeville to (i) sell the properties registered in the name of Pikeville and realise the net proceeds of sale and the net assets of Pikeville for the benefit of VTB and other creditors of Mr Skurikhin, and/or (ii) to instigate the placing of Pikeville into administration so that its net assets may be realised and applied for the benefit of VTB and the other creditors of Mr Skurikhin.

By a directions Order dated 6 February 2015, Leggatt J ordered that the Respondents should be joined to and served with the present application, and where necessary permission was given to serve the application out of the jurisdiction. Mr Skurikhin and Pikeville, as well as the Respondents, have all been served with the application. None of them, however, appeared or was represented at the hearing before me.

VTB is a majority State-owned Russian bank. Mr Skurikhin is a Russian citizen who lives and is domiciled in Russia. He is the Chairman of a substantial group of companies operating in Russia, known as the SAHO group of companies. Between 2007 and 2009, 9 companies in the SAHO group entered into 40 loan agreements with VTB. In 2009, when those loans were refinanced, Mr Skurikhin entered into 40 personal guarantees under which he guaranteed the borrowings of the SAHO group borrowers to VTB under each of the loan agreements. Both the loan agreements and the guarantees contained Russian law and jurisdiction clauses. The various borrowers defaulted on their loans, and VTB called in the loans and brought proceedings in the courts of Russia seeking judgments on each of the guarantees.

Between 2012 and now, VTB has obtained some 25 final judgments from the Russian courts against Mr Skurikhin on his guarantees. Mr Skurikhin engaged in some if not all of the Russian court claims and appealed some of the first instance judgments against him.

By a “without notice” order of Hamblen J dated 16 August 2012, VTB obtained a domestic freezing order against Mr Skurikhin, and a worldwide freezing order against Pikeville, and against the Third Defendant (“Perchwell”) which is another LLP incorporated in this jurisdiction, pursuant to s. 25 Civil Jurisdiction and Judgments Act 1982 in support of the proposed Russian proceedings against Mr Skurikhin on his guarantees. By paragraph 17 of Hamblen J’s order, Mr Skurikhin, Pikeville and Perchwell were required to disclose their assets (in the case of Mr Skurikhin limited to his assets in England and Wales, but worldwide in the case of Pikeville).

On 8 November 2012, Gloster J ordered Mr Skurikhin to disclose further documents and information. Many of those requirements have never been complied with.

Mr Skurikhin instructed Wedlake Bell LLP and counsel to oppose the continuation of the freezing order, and to contest the jurisdiction of the Court, and Pikeville and Perchwell instructed Charles Russell LLP and counsel to contest the continuation of the worldwide freezing order against them.

By order dated 4 December 2012, made following a contested hearing lasting more than 2 days, Burton J upheld the injunctions and dismissed Mr Skurikhin’s jurisdiction challenge. The basis on which the injunctions had been sought, and on which they were continued, was that once VTB obtained judgments in Russia, it could obtain English judgments by way of common law action, and then enforce against Mr Skurikhin’s beneficial interest in the membership shares of Pikeville and Perchwell. Also continued was the extended “Chabra” injunction in relation to Pikeville restraining it from disposing of its interest in its 3 Italian properties. The Court was satisfied that there was a good arguable case on the merits; and also that there was a serious risk of dissipation by Mr Skurikhin, Pikeville and Perchwell in the absence of an injunction. Burton J also concluded that, on the evidence before him, VTB had much the better of the argument that Mr Skurikhin had control over Berenger Foundation and could call for the assets of Berenger Foundation. This judgment is relied upon by VTB on the present application as directly relevant to the issues which now arise, and I will return to consider it in more detail.

VTB subsequently obtained final judgments in the Russian courts against Mr Skurikhin on the guarantees. By mid 2013 it had obtained 16 such judgments. With the permission of Flaux J, by an order dated 28 June 2013, VTB amended the Claim Form and served Particulars of Claim seeking common law judgment against Mr Skurikhin based on those 16 Russian judgments.

On 13 September 2013, VTB issued an application for summary judgment under Part 24 on the claims based on the 16 Russian judgments. In early December 2013, the Particulars of Claim were amended to include a further 9 Russian judgments.

The application for summary judgment was heard by Simon J in December 2013. On that occasion, Mr Skurikhin had instructed Fried Frank Harris Shriver and Jacobson LLP (“Fried Frank”), solicitors, and leading and junior counsel, to oppose the application. Factual and expert evidence was served on behalf of Mr Skurikhin, raising allegations against VTB to the effect that the Russian and English proceedings were part of an illegitimate and fraudulent corporate raid against SAHO which was aimed at taking over the assets of the group, in particular its holdings of land. Simon J gave judgment on 13 February 2014, in which he granted summary judgment in relation to the amounts of the Russian judgments, save the elements thereof which represented default interest as to which he held that there was an arguable case that they were penalties. Accordingly, by order dated 7 March 2014, Mr Skurikhin was ordered to pay to VTB approximately RUB 623.3 million, or the sterling equivalent thereof.

An application was made for permission to appeal to the Court of Appeal. Permission to appeal was granted on condition that Mr Skurikhin pay into court or provide security for the amount of the judgment sum and provide security for VTB’s cost of the appeal by 27 June 2014. No such security was provided, and accordingly the application for permission to appeal was dismissed. The order of 7 March 2014 became enforceable. No part of that judgment has, however, been paid, and it remains outstanding in its entirety.

VTB had applied for the examination of Mr Skurikhin on his assets pursuant to CPR Part 71. By order of 3 April 2014 Males J ordered Mr Skurikhin to attend before Master Eyre on 10 July 2014 to be examined on his assets and to bring to the examination documentation which it was anticipated would assist in the enforcement of the judgment. On 6 June 2014 Fried Frank filed an application to come off the record in the Commercial Court and the Court of Appeal.

On the return date for the examination pursuant to CPR Part 71, Mr Skurikhin did not attend and did not produce any documents, in breach of the Order of Males J.

On 12 June 2014, VTB applied on notice to Eder J, and obtained an order which, effectively, turned the domestic freezing order against Mr Skurikhin into a worldwide freezing order. By Eder J’s order, Mr Skurikhin was required to disclose his worldwide assets and to verify such disclosure on oath. Mr Skurikhin failed to provide any asset disclosure and nor did he provide any affidavit verifying his assets. He was thus in breach of Eder J’s order.

VTB applied to commit Mr Skurikhin for his breaches. By two orders of Flaux J dated 31 October 2014 a prison sentence of 16 months was imposed upon Mr Skurikhin (4 months of which was suspended) for his contempts of Court. Mr Skurikhin has not come into the country since, and the Committal Orders have, accordingly, not been enforced against him. He remains in contempt of Court.

VTB applied for summary judgment in relation to the non-default interest element of a further 9 Russian judgments. On this occasion Mr Skurikhin took no part. By order dated 14 November 2014, Blair J gave summary judgment in favour of VTB in the sum of approximately RUB 480 million, or the Sterling equivalent thereof.

Pikeville was incorporated as LLP number OC30351 on 10 December 2002. Its current members are Mr Lerch, Mr Meier and Crown which is a company registered in Hong Kong. The directors of Crown are Mr Lerch and Mr Meier. The shares of Crown are registered in the name of Meltemia Investments Ltd of Cyprus, which in turn is owned by corporate entities owned by Mr Meier and Mr Lerch. Messrs Lerch and Meier are Swiss individuals who, apparently, provide corporate services.

In June 2005 the then registered owners of the membership shares in Pikeville (which were companies in the Oxnard Group, controlled by Messrs Meier and Lerch) executed declarations of trust in favour of Berenger Foundation. In January 2008, when Messrs Meier and Lerch took over as members of Pikeville, they executed declarations of trust in favour of Berenger Foundation. Later, on 19 January 2010, each of Mr Lerch and Mr Meier declared that he held 0.01 units of Pikeville as nominee and trustee for Berenger Foundation; and Crown declared that it held 99.98 units of Pikeville as nominee and trustee for Berenger Foundation.

Pikeville is the registered owner of 3 Italian properties: “property Sasso Marconi” at Via Lagune 9, Sasso Marconi, valued in 2012 at €800,000; “property Milano Marittima” at Viale Tiziano 14, Cervia, valued in 2012 at €9.5 million; and “property Bologna” at Via Gaibara 3, Bologna, valued in 2012 at €7.65 million.

Of these, property Milano Marittima is subject to a charge or rights in rem in respect of a lease interest granted to Mr Meier. The evidence before the Court indicates that Mr Meier rented that property to Mr Skurikhin for a period of 10 years from 1 January 2008. There is no evidence of rent being paid. Property Bologna is also subject to a charge or rights in rem in respect of a lease interest granted to Mr Meier. Mr Meier has confirmed that this property is rented to Mr Skurikhin’s wife, Mrs Elena Skurikhina. Again, there is no evidence of rent being paid.

Pikeville also owns a 100% interest in an Italian company, Paradis de Beauté Srl. It appears that this company owns a beauty parlour in Bologna, and there is some evidence that Mrs Skurikhina has a de facto controlling interest in it. Pikeville has made an unsecured loan to Paradis de Beauté Srl in an amount of approximately €1 million, pursuant to a Loan Agreement under which unsecured sums up to €1.5 million can be advanced on terms that repayment should occur at the end of 2019, and that there is no obligation to pay over interest in the interim.

As set out by Gloster J in her judgment of 8 November 2012, Pikeville (and Perchwell) have, in their publicly filed accounts, adopted “what can only be described as an extremely coy attitude to the disclosure of the identity of their ultimate controlling party and related party transactions”. The accounts for each of the years 2007-2011 were qualified by the auditors by reason of the members of the LLP having failed to comply with FRS 8 “as they were unable to disclose the identity of the ultimate controlling party, transactions related thereto, and any other related party transactions.”

This approach notwithstanding, further links between Pikeville and Mr Skurikhin and the SAHO group of companies have clearly emerged. Specifically:

In addition, Pikeville is the apparent debtor under a loan arrangement with a BVI company called Miccros Group Ltd (“Miccros”) in a sum of € 20 million. VTB’s position is that that loan has the characteristics of a sham debt. Whether it was a sham or not is not something which can or needs to be resolved now. The following features of the apparent debt are, however, pertinent:

As I have already set out, Berenger Foundation is a Liechtenstein foundation. Certain evidence was put before Burton J in relation to Liechtenstein foundations in December 2012, and is referred to in paragraph [16] and [17] of his judgment. As Burton J set out, it is clear that there can be an overriding mandate, which does not need to be in writing, and the mandatory can give directions and instructions which bind the directors of the foundation.

For the purposes of the present application, VTB has adduced further evidence from its expert in Leichtenstein law, Dr Heinz Frommelt.

Dr Frommelt’s report contains the following evidence:

“Apart from statutes, bye-laws or regulations, Liechtenstein law allows there to be an overriding (in most cases tax detrimental) mandate agreement which provides an economic founder the power to instruct the board of directors/foundation council. The mandatory in such an agreement is considered to be a de facto body of the foundation … Such mandate agreement however does not need to be concluded in writing. It is valid if concluded orally. My experience is that most mandate agreements are oral nowadays. Nevertheless, in both cases the board of directors/foundation council are bound by the instruction of the mandatory. In most cases the mandatory is likely to be the real economic founder of the foundation. If the mandate agreement is concluded orally, it may be difficult to prove that the mandatory and the board of directors/foundation council are under the influence of the economic founder. Therefore, one has to look at the business and investment decisions of the foundation for example whether the foundation has entered into a business decision that makes no direct sense for the foundation but seems to benefit the economic founder or mandatory.

…

Accordingly, if (as appears likely to be the case) Mr Skurikhin or his agent (probably Mr Meier and/or Mr Lerch) is the mandatory to a mandate agreement with the board of directors/foundation council of the Berenger Foundation and provided that any instruction is not in conflict with the foundation documents, it is my view that it is likely that he would be able to instruct the board of directors to transfer at least significant parts of the Berenger Foundation’s interests in Pikeville and Perchwell into his own name or into the name of a third party such as a court appointed receiver. … I have no reason to believe that such an instruction would conflict with the foundation documents on the material I have seen …

…

The documents I have seen point strongly towards Mr Skurikhin having a significant involvement in the formation of the Foundation, and point towards his being a mandator and the economic founder. The assets of Pikeville appear to be enjoyed by Mr Skurikhin and his wife, and by no other family. … In short, my overall impression is that Mr Skurikhin is likely to have had significant access to funds to place into the Foundation structure, and from what I have seen of the assets of Pikeville (and Perchwell) Mr Skurikhin is the person most likely to have established, funded and controlled the Foundation.

…

My experience suggests that if, as I consider probable, Mr Skurikhin is benefiting from the beneficial interests in the Berenger Foundation then he is likely to be well aware of the origin of its assets. It would be remote from everyday life to assume that an unknown and non-associated generous patron aids and abets strangers out of his or her good nature. On that basis and without any alternative explanation from Mr Skurikhin my experience suggests that he and his family are probably able to benefit from the Berenger Foundation because he is in de facto control as a mandatory and its economic founder.

…

From my practical experience, I am able to say that in most of Liechtenstein discretionary foundations at least one of the discretionary beneficiaries has an involvement in the inception of the foundation. In the case at hand, Mr Skurikhin is the only confirmed discretionary beneficiary. Mostly, other beneficiaries emanate from the close family … In any event, discretionary foundations in which the founder has no beneficial interest are rarely found and exceptional indeed.”

Section 37(1) Senior Courts Act 1981 gives the Court the power to appoint a receiver in all cases in which it appears to the Court to be “just and convenient” to do so. Section 37(2) provides that such an order may be made conditionally or on such terms as the Court thinks just. Section 37(4) refers specifically to the appointment of a receiver by way of equitable execution.

An important milestone in the development of English law in relation to the appointment of equitable receivers is the decision of the Court of Appeal in Masri v Consolidated Contractors (UK) Ltd (No. 2) (“Masri”) [2009] QB 450. As subsequently summarised by Lord Collins of Mapesbury in Tasarruf Mevduati Sigorta Fonu v Merrill Lynch Bank and Trust Co (Cayman) Ltd (“Tasarruf”) [2012] 1 WLR 1721 at [56], Masri confirmed or established the following principles:

More recently still, there has been a helpful distillation of the principles on which the Court will act in determining an application to appoint an equitable receiver by Males J in Cruz City 1 Mauritius Holdings v Unitech Ltd (“Cruz City”) [2014] EWHC 3131 (Comm) at [47]. Males J said:

“In the light of these and other statements cited, I would summarise the position so far as relevant to the present application as follows:

a)

The overriding consideration in determining the scope of the court’s jurisdiction is the demands of justice. Those demands include the promotion of the policy of English law that judgments of the English court and English arbitration awards should be complied with and, if necessary, enforced.

b)

Nevertheless the jurisdiction is not unfettered. It must be exercised in accordance with established principles, though it is capable of being developed incrementally. It is not limited to situations where equity would have appointed a receiver before the fusion of law and equity pursuant to the 1873 Judicature Acts. Specifically, in modern conditions where business is increasingly global in nature, the jurisdiction is ‘unconstrained by rigid expressions of principle and responsive to the demands of justice in the contemporary context’.

c)

The jurisdiction will not be exercised unless there is some hindrance or difficulty in using the normal processes of execution, but there are no rigid rules as to the nature of the hindrance or difficulty required, which may be practical or legal, and it is necessary to take account of all the circumstances of the case. That is all that is meant by dicta which speak of the need for ‘special circumstances’: see in particular the decision of Tomlinson J in Masri … and also the decision of Arnold J in UCB Home Loans Corporation Ltd v Grace [2011] EWHC 851 (Ch), holding that there were sufficient ‘special circumstances’ rendering it just and convenient to appoint a receiver by way of equitable jurisdiction when it would be ‘difficult for the claimant to enforce its judgment by other means’ and that the appointment of a receiver was the only realistic prospect available to the judgment creditor to enforce its judgment in the short term.

d)

As the statutory source of the court’s power to appoint a receiver speaks of what is ‘just and convenient’, it is impossible to say that convenience is not at least a relevant consideration (albeit not the only one).

e)

A receiver will not be appointed if the court is satisfied that the appointment would be fruitless, for example because there is no property which can be reached either in law or equity. That is an aspect of the maxim that equity does not act in vain. However, a receiver may be appointed if there is a reasonable prospect that the appointment will assist in the enforcement of a judgment or award. It is unnecessary, and will generally be pointless, for the court to attempt to decide hypothetical questions as to the likely effectiveness of any order. That applies with even greater force where such questions involve disputed issues of foreign law. It is sufficient that there is a real prospect that the appointment of receivers will serve a useful purpose.”

In the present case, VTB seeks the appointment of receivers over the membership interests in Pikeville, on the basis that they are to be regarded as an asset of Mr Skurikhin’s. It contends that this is so, notwithstanding that the registered owners hold those interests as nominees and trustees for the Berenger Foundation, on the basis that Mr Skurikhin is or should be regarded as the ultimate beneficial owner of those LLP membership interests.

Three issues arise. First, over what assets may a receiver by way of equitable execution be appointed? Secondly, has VTB established that the membership interests in Pikeville fall within that category? Thirdly, is it just and convenient in the circumstances of the present case to appoint receivers? I will take these issues in turn.

Mr Penny for VTB submitted that the answer to this question is that a receiver by way of equitable execution may be appointed over whatever may be considered in equity as the assets of the judgment debtor. For this proposition he cited Masri at paragraph [151]; Tasarruf at paragraph [6]; and Blight and Others v Brewster (“Blight”) [2012] EWHC 165 (Ch) at paragraph [66].

More specifically in the present context, Mr Penny submitted that property subject to trust or analogous foreign arrangements would be regarded in equity as assets of the judgment debtor if he has the legal right to call for those assets to be transferred to him or to his order, or if he has de facto control of the trust assets in circumstances where no genuine discretion is exercised by the trustee over those assets.

Mr Penny referred to three authorities in this regard. The first was Tasarruf. In that case the Privy Council considered whether a receiver by way of equitable execution could and should be appointed over a power of revocation of a Cayman Islands trust. An unfettered power of revocation had been reserved to the settlor in the trust deed. The judgment debtor argued that there could be no appointment of a receiver over a power of revocation because it was not property, and that in any event there should be no appointment of a receiver over such a power. The Privy Council rejected those arguments and concluded that the appropriate order in that case was that the judgment debtor should delegate his powers of revocation to receivers so that they could exercise them to enforce the Turkish judgment.

In the course of giving the opinion of the Board, Lord Collins, at paragraph [59] said:

“… The powers of revocation are such that in equity, in the circumstances of a case such as this, Mr Demirel [the judgment debtor] can be regarded as having rights tantamount to ownership.”

By this, Mr Penny submitted, Lord Collins was saying that Mr Demirel had rights tantamount to ownership of the property subject to the settlement.

Similarly, at paragraph [62] Lord Collins said this:

“In the present case the power of revocation cannot be regarded in any sense as a fiduciary power, and the defendants do not suggest otherwise. The only discretion which Mr Demirel has is whether to exercise the power in his own favour. He owes no fiduciary duties. As has been explained, the powers of revocation are tantamount to ownership.”

In Blight the defendant judgment debtor had the right under his pension to draw 25% of the pension as a lump sum, but the claimant could not obtain a third party debt order until the right to draw down had been exercised, since prior to that there was no money due and owing to the judgment debtor. Mr Gabriel Moss QC, sitting as a Deputy High Court Judge, said, at [68], that the judgment debtor’s ability to elect to take his cash payment must be regarded as being a right “tantamount to ownership”. Again, that must mean “tantamount to ownership of the 25% of the pension”.

Finally Mr Penny referred to a decision of the Court of Appeal which, though concerned with freezing orders, contains statements relevant to the present issue. This was the decision in JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev (“Pugachev”) [2015] EWCA Civ 139. In Pugachev, Lewison LJ (with whom Christopher Clarke and Arden LJJ agreed):

In my judgment these authorities do support Mr Penny’s submission as set out in paragraphs 38 and 39 above, which I accept.

This depends on whether the Court is satisfied that Mr Skurikhin either has a legal right to call for the assets of the Berenger Foundation to be transferred to him or to his order, or has de facto control over the assets of the Berenger Foundation.

Mr Penny submitted, and I accept, that at this stage of the proceedings this question has to be answered on the balance of probabilities.

On the material before me, I am satisfied that it is more likely than not that Mr Skurikhin does either have a right to call for the assets of the Berenger Foundation to be transferred to him, or has de facto control of those assets.

The following matters have led me to reach that conclusion:

Given this conclusion, it follows that the membership interests in Pikeville, which the members themselves say are held as nominees for the Berenger Foundation, should be considered in equity to be Mr Skurikhin’s assets, and thus that it is open to the court to appoint a receiver over them.

I have reached this conclusion independently on the material which is before me. My conclusion is, however, the same as that which was reached by Burton J in his judgment of 4 December 2012. Albeit that decision was made at an interim stage, Burton J decided that VTB had much the better of the argument in relation to issues which are essentially the same as those which have arisen before me and which I have addressed above: see in particular paragraphs [19], [30-34], [41] and [46] of Burton J’s judgment. This decision was made after a hearing at which Mr Skurikhin and Pikeville were represented, which gives reassurance that there are no arguments which could be raised in opposition to the present application which have not emerged. Furthermore, the evidence before Burton J was essentially the same as that before me. If anything the evidence has strengthened in VTB’s favour since Burton J’s judgment, in that VTB has put in further evidence from Dr Frommelt, and evidence from Mr Tim Davies.

In my judgment it is plainly just and convenient for equitable receivers to be appointed in the present case.

The demands of justice include promotion of the policy of the law that judgments of the English Court should be complied with and if necessary enforced. There is no other obvious practical and realistic means open to VTB of executing the judgments against Mr Skurikhin, who has failed to disclose his assets worldwide in breach of the order of Eder J, failed to attend the oral examination of his assets under CPR Part 71, and who remains in contempt of Court and subject to an order for immediate imprisonment. Mr Penny has told the Court that, with the exception of the value of the LLP interests in Perchwell, which are unclear, and the alleged debt to Miccros, which I consider further below, VTB knows of no assets other than the LLP interests in Pikeville which are owned by Mr Skurikhin and amenable to execution.

I consider that there is “a real prospect that the appointment of receivers will serve a useful purpose” and, conversely, am not satisfied that such an appointment would be “fruitless”, to use the phrases of Males J in his fifth principle in Cruz City, cited above. Insofar as it might have been contended that the appointment would serve no useless purpose because Pikeville is insolvent on the face of its accounts, I do not consider that such an objection would have had merit. Pikeville is only apparently insolvent because the supposed debt to Miccros exceeds the assets of the LLP. I accept, however, that there is a clear prima facie case that the alleged debt is not a genuine debt and/or is a sham. If a receiver is appointed and if Pikeville is placed into administration, it would be for Miccros to prove its debt in the administration. There is a real prospect that the alleged debt would not be accepted by the administrators, and therefore that Pikeville’s net assets would be the net sale proceeds of the Italian properties and any repayments that can be achieved in respect of the loans made by Pikeville. Those net assets would be available to the members of Pikeville, and therefore through the receivers, to VTB and any other creditors of Mr Skurikhin.

In this context I should add that if the course is followed of appointment of receivers, and if Pikeville is placed into administration and if the Miccros debt is determined to be a bona fide debt, then, given that Miccros is a BVI company owned as to 55% by Berenger Foundation, VTB considers that it should be able to enforce its judgments against what is to be treated as Mr Skurikhin’s 55% shareholding in Miccros through the appointment of a receiver in the BVI. VTB has adduced evidence from Mr Thorp of Harneys as to the position under BVI law, which indicates that this appears a real possibility.

The sums involved are significant, in excess of £10 million. I do not consider that the appointment of receivers is, in the circumstances, disproportionate.

From the evidence of Mr Khodykin, it appears that comity with the Russian courts does not in any way suggest that receivers should not be appointed.

CPR 69PD.4 sets out the evidence which must be adduced in support of an application for the appointment of a receiver. The requirements of CPR 69PD.4.1 have been satisfied.

As to CPR 69PD.4.2, the individuals who have been identified are David Antony Rubin and Stephen Mark Katz of 26-28 Bedford Row, London, WC1R 4H, and I have seen their written consents to act. I have also seen statements satisfying CPR 69PD.4.2(2). Mr Rubin and Mr Katz hold the appropriate bond pursuant to the Insolvency Practitioners Regulations 2005.

In the circumstances I will appoint Mr Rubin and Mr Katz as receivers over the LLP membership interests in Pikeville, by way of equitable execution. I will hear counsel further in relation to the terms of the Order.