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Aeroflot expects hearing on Berezovsky estate in April

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18:49 07/02/2014

MOSCOW, February 7 (RAPSI, Ingrid Burke) - Lawyers for Aeroflot expect the London High Court of Justice to hold a hearing on the issue of who will be appointed to administer the estate of the late Russian oligarch Boris Berezovsky in mid-April, and that a decision may be handed down in May or June, a representative of the airline’s legal team told RAPSI Friday.

The spokesperson noted that a precise date has not yet been determined.

Aeroflot’s statement comes on the heels of a judgment released by the High Court in late January dealing with the strictly confidential details of a settlement between Berezovsky and the so-called AP family, which includes respondents: Inna Gudavadze, Iya Patarkatsishvili, Liana Zhmotova, and Natela Patarkatsishvili.

The information may prove crucial to a determination of whether the decease oligarch’s daughter Ekaterina Berezovskaya should be appointed to administer her father’s estate.

Background

Berezovsky’s body was discovered in his Berkshire home on March 23, 2012. A post-mortem examination found the cause of death to have been consistent with hanging.
He left behind a will naming five executors. According to the judgment, three of them have since renounced probate. The two that have not include Berezovskaya and Helena Gorbunova, his former partner and the mother of two of his children. When no one came forward to represent Berezovsky’s estate immediately following his death, the court appointed receivers.

The Aeroflot and Samara proceedings

Prior to his demise, Berezovsky had been embroiled in various legal dramas. Among these were cases brought against him by Aeroflot and the Samara Region.

In April 2012, Samara Region was awarded nearly one billion rubles in damages against Berezovsky and his former associate Yuly Dubov. Prosecutors claimed that the men had carried out a series of thefts that proved detrimental, having incurred 58 million rubles in losses to the region. That amount was later indexed for inflation and interest.

In September of that same year, the Samara Region filed a claim with the London High Court seeking recovery of the funds.

In a separate case, Berezovsky was convicted alongside former associate Nikolai Glushkov of having defrauded Aeroflot in the 1990s. In November 2007, Moscow’s Savelovsky Court convicted Berezovsky of fraud and found him jointly and severally liable with Mr. Glushkov to pay Aeroflot over 200 million rubles. The judgment took effect in February 2008, after Moscow City Court dismissed Berezovsky’s appeal.

In 2011, Aeroflot sought an adjustment of the amount awarded, taking inflation into consideration, charging that the original award should be increased to upwards of two billion rubles. The Golovinsky Court granted the inflation adjustment in full. Aeroflot then initiated proceedings in the UK seeking enforcement of the Russian judgment.

On September 2, 2013, Aeroflot filed a claim asserting its status as a creditor of the Berezovsky estate and seeking an order for the administration of the estate, or in the alternative for an order passing over any claims for a grant of probate or administration by Berezovskaya or Gorbunova in favor of the appointed receivers.

The present proceedings

In August 2013, Berezovskaya applied for a grant of administration of the estate. The following month, the court considered the application as well as the opposition expressed by Aeroflot and Samara.

Aeroflot and Samara asserted at that point, according to the judgment, that the Berezovsky estate was, “hopelessly insolvent, that the estate ought to be administered in the best interests of the creditors and that the receivers were more appropriate than Ms Berezovskaya to act as administrators for that purpose.” To support their assertion of hopeless insolvency, Aeroflot and Samara drew evidence from reports filed by the receivers.

With regard to this dispute, the presiding judge noted that a determination of the estate’s solvency or lack thereof may determine the appropriateness of satisfying Berezovskaya’s request to serve as the estate’s administrator. The judgment stated: “I considered in the light of the arguments as to the issue of the solvency of the estate that the outcome of that application might well turn on the court’s assessment of the solvency of the estate.”

Speaking to the point of the receivers’ reports, the judge noted: “They have given their reasons for concluding that the estate is insolvent, or at the lowest, may well be insolvent. That position is adopted by Aeroflot but is very much disputed by Ms Berezovskaya.”

Berezovskaya referenced a witness statement taken in October 2013, which dealt with the estate’s assets and liabilities and arrived at the conclusion that the estate is comfortably solvent. The statement exists in both redacted and un-redacted forms.

The redacted information was described by the court as pertaining to a highly confidential settlement, the terms of which cannot be disclosed without permission, or if compelled by a court order. The redacted version of the statement concluded that the receivers’ report had referred to this settlement, but that its information on the matter may prove unreliable.

Initially, it was agreed that Berezovskaya would provide copies of the confidential information to lawyers for Aeroflot and Samara, but not to the parties themselves. Aeroflot’s lawyers returned the information to Berezovskaya, however, finding that it would have been a conflict of interest to retain the information if unable to disclose it to Aeroflot.

Aeroflot argued that it would be impossible to properly instruct its solicitors on the issues arising from the confidential information without access to it. The airline asserted that the information should either be freely available to the parties, or should not be relied upon at all.

Berezovskaya asserted a willingness to disclose the confidential information with Aeroflot, but noted that she may not be free to do so owing to the confidentiality agreement. If unable to share the confidential information, she sought permission from the court to share it only with Aeroflot’s lawyers.

The AP family argued that the settlement was strictly confidential, and that Berezovskaya’s failure to adhere to the confidentiality agreement would significantly harm the family’s interests. They have not applied for an injunction to restrain Berezovskaya from breaching the confidentiality agreement, however – which the judgment notes may be due to a clause within the agreement.

The court held that Berezovskaya would be permitted to rely on the confidential information.

Its disclosure to Aeroflot will be tempered by several restrictions. Certain individuals crucial to the case will be identified, and each will be given a hard copy of the information, which will be forbidden from leaving a designated office or being copied or otherwise reproduced.

Each designated person will be required to sign a non-disclosure agreement forbidding the use of the information in a context other than the present proceedings. 

With regard to Samara, the court notes that the region was not a claimant in the present claim initially brought by Aeroflot, and that it has not yet been decided whether Samara has standing to oppose the application, but that the same restrictions should apply in its case as were applied to Aeroflot.

With regard to the complexity surrounding Berezovsky’s estate in general, the court noted: “I can see that there might be considerable difficulty in coming to a view as to the precise position as to the assets and the liabilities of the estate,” adding, “The issues between the parties as to the solvency of the estate include issues as to whether certain assets are beneficially owned by the estate or by third parties. Further, there are issues as to whether the estate has liabilities to third parties.”

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Aeroflot expects hearing on Berezovsky estate in April

18:49 07/02/2014 Lawyers for Aeroflot expect the London High Court of Justice to hold a hearing on the issue of who will be appointed to administer the estate of the late Russian oligarch Boris Berezovsky in mid-April, and that a decision may be handed down in May or June.
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