New Judgment – Denali Corp-FZCO v Manson & Ors (Re Petropavlovsk plc (in liquidation)) [2026] EWHC [2287] (Ch)

HHJ Johns KC, sitting as a Judge of the High Court, has held on an application under section 112 of the Insolvency Act 1986 that the joint liquidators of Petropavlovsk plc may consent to the assignment by Atlas JSC, a person designated under the Russia (Sanctions) (EU Exit) Regulations 2019, of its rights to receive the proceeds of the liquidation, without breaching the sanctions legislation. The judgment applies the Court of Appeal’s analysis of the fund/economic resource distinction in Mints v PJSC National Bank Trust [2023] EWCA Civ 1132 to rights arising in an insolvent estate.

Petropavlovsk plc was an English company engaged in gold mining in Russia. The sanctions imposed in 2022 made its business unviable. It entered administration on 18 July 2022, and the sale of its business to Atlas for a total consideration of USD 619 million was effected by a share sale deed dated 1 August 2022, court approval having been given in Re Petropavlovsk plc [2022] EWHC 2097 (Ch). Under that deed Atlas became entitled, once all other creditors and the expenses of the insolvency had been discharged or reserved for in full, to a subordinated and limited-recourse repayment of the term loan it had taken by assignment from Gazprombank (clause 10.1) and to any residues of two funds held for administration expenses and contingencies (clauses 12.1 and 13.1) — in substance, the surplus of the estate. The company entered creditors’ voluntary liquidation on 9 July 2024. Atlas is the only remaining creditor. A dividend of 29.2p in the £ was declared on its proof on 8 October 2024 but has not been paid.

By a settlement agreement and assignment agreement dated 16 April 2025, Atlas assigned those rights to Denali Corp-FZCO, a Dubai company, in consideration for Denali releasing an Atlas subsidiary from a heavily loss-making gold sale contract. The assignment was expressed to be effective upon the consent of Petropavlovsk under the share sale deed, such consent not to be unreasonably withheld or delayed. Before consent was given, on 17 June 2025, Atlas was designated and made subject to an asset freeze. The liquidators, adopting a neutral stance, made clear that they would consent if it were determined that consent involved no breach of the Regulations. OFSI was notified of the proceedings and declined to intervene.

HHJ Johns KC held:

• The subject of the assignment was the bundle of contractual rights arising under clauses 10.1, 12.1 and 13.1 of the share sale deed — the rights to the liquidation proceeds — and not the term loan, Atlas’s proof of debt, or the declared dividend. That followed from the language of the settlement and assignment agreements, construed together as parts of one transaction, and from commercial common sense: an assignment away of the term loan would have put at risk Atlas’s contractual set-off of the term loan against the unpaid term loan consideration ([36]–[39]).
• Those rights are an economic resource within section 60(2) of SAMLA, not a fund within section 60(1). Applying the Chancellor’s reasoning in Mints at [197], the items in the non-exhaustive definition of a fund share the characteristic of being valid rights of intrinsic financial value, usually for a liquidated sum. The clause 10.1 right is a right to payment only of any surplus in the liquidation, dependent on uncertain asset realisations and uncertain fees and expenses; in practice, a right to prove for an uncertain sum ([44]–[46]). The rights to the residues of the administration and contingency funds are reversionary or contingent interests under trusts, conferring no present interest in the funds, and share the same character of uncertainty ([48]). The judge acknowledged that the case was less clear than Mints and that the rights lie closer to the border between fund and economic resource ([50]).
• The pari passu rule was not the source of the relevant uncertainty in this case: Atlas is the only remaining creditor, and its right is to the surplus once all other obligations have been met ([47]).
• The giving of consent is not a “dealing” with an economic resource within regulation 11(5). Borrowing the language of Mints at [206]–[208], the words “deals with” are not apt to describe the simple giving of consent to an assignment between third parties: the company is not a party to the transaction and neither exchanges the rights for funds nor uses them in exchange for funds ([54]). Consent may therefore be given without breach of the Regulations ([55]).
• The conclusion involved no unduly narrow reading of the legislation, and was reached without reluctance: every benefit Atlas was to receive under the April 2025 arrangements had passed to it before designation, so that consent puts no assets in the hands of the designated person, whereas a refusal would have left Atlas with the benefit of the transaction and Denali without its consideration ([57]–[58]).

Adam Al-Attar KC of South Square appeared for the successful Applicant, leading Ali Al-Karim of Brick Court Chambers and Charlotte Ward of South Square, instructed by Enyo Law LLP (Richard Levett, Jamie Leader and Bridget McLay).

Read the full judgment here

Read the order here