Boris Berezovsky and Insolvent Estates

October 29, 2015 David Freedman Estate & Trust, In the News 0 Comments

“Platon Elenin (also known as Boris Abramovich Berezovsky) died on 23 March 2013 at his home in Berkshire. Once an exceptionally rich and politically powerful oligarch in post-Soviet Russia, he died insolvent. In October 2014 the deficit in his estate was estimated at not less than £40 million” – so begins the judgment of Justice David Richards in Re Estate of Platon Elenin (aka Boris Abramovich Berezovsky); Subnom Lockston Group Inc v Wood, [2015] EWHC 2962 (Ch). It is amazing that a man such as Boris Berezovsky could go from a $3B fortune to being found dead in his London home, apparently having hanged himself. An “open verdict” by the coroner left open the possibility of a more nefarious death than suicide.

Notwithstanding that the judgment is an English one, and the English legislation differs somewhat from our own Bankruptcy and Insolvency Act, it is a useful reminder of the general principles relevant to insolvent estates.

Estate Trustees are trustees for those interested in the Estate; ergo, the creditors of the insolvent estate have rights (other than those that are secured or established by statute) to payment pari passu from out of the assets. Usually the disputes that arise are not so much with general creditors, as with the priority of administration expenses borne by the estate trustee herself or that are “first charges” on the estate. A prudent estate trustee will apply to the Court under s. 60 of the Trustee Act for directions to approve a scheme of administration to ensure he or she does not run foul of creditors’ claims and be liable for compensation.

If I could say one thing on this topic to general practitioners administering insolvent estates beset by claims by family members and creditors alike it is this: retain counsel and proceed with extreme caution lest you not only go unpaid but become the only actor in the tragedy with something in his pocket to fight over.

 

 

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