High court orders restoration of dissolved BVI companies

21 Jan 2025Court Report

High Court rules on the restoration of dissolved BVI companies amidst a freezing injunction dispute

High Court Orders Restoration of Dissolved BVI Companies

The High Court of Justice, Business and Property Courts of England and Wales, has delivered a significant ruling in the case of JSC Commercial Bank Privatbank versus Igor Valeryevich Kolomoisky and others. The case, presided over by Mr. Justice Trower, revolved around the restoration of 21 companies to the BVI register of companies. The companies had been dissolved, leading to the assets they held being vested in the government of the British Virgin Islands (BVI) as bona vacantia.

The claimant, JSC Commercial Bank Privatbank, sought an order compelling Mr. Bogolyubov to use all reasonable endeavours to restore the dissolved companies and provide updates on the progress. The court's decision was made on the papers without a hearing, following an agreement on most issues between the parties.

The background of the case involves a worldwide freezing injunction imposed on Mr. Bogolyubov since December 2017. This injunction prevents him from dealing with or diminishing the value of his assets worldwide. The dissolution of the companies, which were disclosed during asset disclosure, was discovered by the bank in August 2023. Of the 36 companies involved, 35 were dissolved between May and November 2023, and 30 were said to hold assets for Mr. Bogolyubov.

The dissolution resulted from the resignation of their registered agent and non-payment of registry fees. Under BVI law, applications can be made to restore a dissolved company to the register, and upon restoration, the assets revest in the company. The bank contended that the assets held by these companies could be worth up to US$ 1 billion.

The court found that the dissolution of the companies would render their assets unavailable for enforcement unless restored. It was determined that Mr. Bogolyubov could have prevented the dissolution by paying the necessary fees or appointing alternative registered agents. The court held that the bank established a good arguable case that Mr. Bogolyubov had not taken reasonable steps to prevent the dissolution.

The court also addressed the issue of costs, ruling in favour of the bank. The bank was awarded costs on the indemnity basis, as the court found Mr. Bogolyubov's conduct to be out of the norm, involving unreasonable and potentially prejudicial delaying tactics.

The decision underscores the importance of compliance with court orders and the responsibilities of parties under a freezing injunction. The ruling also highlights the complexities involved in international asset protection and the legal obligations of individuals and entities in such cases.