A review of 2022 complex international insolvency cases – the challenges and how they were addressed
January 20, 2023
What do the collapse of a major cryptocurrency exchange, Britain’s allegedly biggest-ever personal insolvency and the devastation of one of Russia’s major gold mining businesses by post-Ukraine invasion sanctions have in common? The answer is that in each of these very different international insolvency cases, the subsequent rescue bid has involved Opus Partner, Allister Manson, who was recently named the Insolvency Professional of the Year at the Insolvency Practitioners Association 2022 Awards.
Allister discusses the issues faced and the approach taken to address each of these cases.
The background for each case
Case: Cubits – cryptocurrency exchange
In early 2019, Opus was asked to act as Administrators of the UK company which operated a cryptocurrency exchange, trading platform and storage facility, trading as Cubits, and had become one of the fastest-growing cryptocurrency platforms in Europe following its launch in 2015. The company may have been registered in the UK, but its operations were both multinational and cyberspheric. In 2018, the accounts of three Chinese customers were allegedly hacked, resulting in the loss of Bitcoin with a cash value of circa €29 million, rendering Cubits hopelessly insolvent.
Case: Pramod Mittal bankruptcy
In October 2020, Allister was asked to put together and act as the Joint Supervisor of the Individual Voluntary Arrangement (IVA) of Pramod Mittal, who had been declared bankrupt in the UK and claimed to have debts totalling £2.55bn. Mr Mittal’s business interests and creditors spanned the globe, including issues arising in India, the Philippines, Bosnia & Herzegovina, Nigeria, the Isle of Man, Mauritius, BVI, Indonesia, Singapore and Dubai.
Case: Petropavlovsk – gold mining
In July 2022, Allister was appointed by the High Court in London as one of the Administrators of Petropavlovsk PLC, a UK company with securities listed on the London, Moscow and Dublin Stock Exchanges and which managed a significant gold mining business in Eastern Russia via a large network of group entities. The PLC had been prevented from making interest payments on its debts to a Russian bank by the sanctions regime introduced by the UK following the invasion of Ukraine, causing a default on those debts. The Administrators completed the sale of the Company’s assets for more than $600m in September 2022, which is expected to be sufficient to be able to repay the PLC’s creditors in full. The distributions to creditors are anticipated to be made via Court-sanctioned Schemes of Arrangement and should be implemented by the end of January, surely one of the fastest distributions in an insolvency of this magnitude!
Managing the cases
Key take aways that are relevant to all three cases:
- Clear initial objectives and strategies and then ongoing flexibility are vital
It has been crucial to have a clear strategy from the outset. Thereafter, the chosen approach must be reviewed regularly and adapted as facts and circumstances change.
- Bringing other professional disciplines into the team and managing them effectively
Whether the task is tracing assets and missing people, confirming creditor claims or establishing the value of a gold mining business in Siberia, forensic accounting expertise is essential in complex cases. Tracking the movement of assets and their ownership through cyberspace and rebuilding accounting records in the absence of management cooperation requires highly specialised knowledge and experience. Knowing the right people and firms to instruct is one thing; giving them a clear and focused brief, and then managing them is quite another. Most important of all is preventing them from disappearing unproductively down the many ‘rabbit holes’ they will encounter.
- Using different specialists within the same professional disciplines
On smaller, less complex insolvency cases it may be satisfactory to appoint a generalist professional, such as a legal advisor. Assignments like these bring a level of complexity, which can mean appointing several different firms and even counsel. The global sanctions regime and its potential impact on the Petropavlovsk case is a prime example. Not only is this area of law constantly changing, but there are brand new legal challenges to overcome, so being able to source advice and assistance from a range of legal professionals is essential.
- Understanding different legal regimes and commercial cultures around the world
Every judicial system and commercial culture is different, particularly when it comes to insolvency issues. The UNCITRAL Model Law might facilitate local recognition of UK insolvency office holders, but that does not mean that global or regional insolvency law and practice has been harmonised in any meaningful way. It is essential to accept the differences and work with them, using the best quality local advisers to achieve what is possible through whatever strategies and means are appropriate to each jurisdiction.
- Communication, communication, communication
On major cases, clear communication with stakeholders, within the Opus team and externally with the media where necessary is key. Any failure to get this right will distract the core team, delay matters and unnecessarily increase costs. This has been a significant issue on the Petropavlovsk case for example, where there has been an extensive lack of knowledge of UK insolvency rules and procedures among the hundreds of international shareholders, requiring patient and detailed explanation.
Complex, multi-faceted cases generally mean more people working on them, which in turn can spawn silos within the team. This will not just hinder good internal communication but lead to information hoarding and non-sharing. Equally, it is important to avoid information overload, where team members are drowned by data that does not concern them or their role. Getting the balance right will contribute significantly to the efficiency and success of the assignment. Ultimately, teams on large cases must work with and for each other.
International insolvency cases in summary
There is no template for large, complex international insolvency and restructuring cases, no one size fits all. What is needed is a clear vision, a willingness to be flexible, being open constantly to expert advice and a flair for innovation and lateral thinking. Most of all, a generous helping of courage is vital. This is not work for the faint-hearted or narrow-minded!
If you would like to speak to our Insolvency Practitioner, Allister Manson, Partner at Opus, about any aspect of this article or would like to have a wider conversation about international insolvency cases, Allister can be contacted at or on +44 (0) 7775 570 017