High Court gives liquidators go-ahead for agreement on €1.57bn of Russian funds

The liquidator said most of the funds were listed for trading on the Moscow Stock Exchange and the majority of beneficial owners were located in Russia

The High Court heard that for more than 99% of shareholders one part of the chain of custody of investments was the Russian National Settlement Depository which, since 2022, had been a designated entity under the sanctions imposed by the European Commission following the invasion of Ukraine. File photo: Laura Hutton/RollingNews.ie

The High Court has given the go-ahead to joint liquidators of two war-sanctioned Russian investment funds worth $1.82bn (€1.57bn) to enter a cash management agreement to assist them turn shares into cash for shareholders.

Barrister Kelly Smith SC had on Tuesday told Ms Justice Siobhan Stack that the liquidators Damien Murran, of Teneo Financial Advisory Ireland Limited, and Jennifer McMahon, an employee of Teneo, had to deal with extremely complex and challenging issues.

Mr Mur­ran and Ms McMa­hon, the court heard, were in the early steps of liquid­at­ing the volat­ile assets of about 700,000 Russian investors in FinEx Funds ICAV and FinEx Phys­ic­ally Backed ICAV, both Irish col­lect­ive asset man­age­ment vehicles.

Ms Kelly, who appeared with A&L Good­body Soli­cit­ors for the joint liquid­at­ors, told the judge they pro­posed enter­ing into a cash man­age­ment and trust deed with Teneo Asset Solu­tions Lim­ited (TAS) and needed leave of the court to do so.

Mr Mur­ran stated in writ­ten evid­ence that the court order was being sought to facil­it­ate real­ising, as quickly as pos­sible, a substan­tial por­tion of the assets and enter­ing into the TAS con­tract was a key step in doing so while redu­cing expos­ure to market risk for share­hold­ers.

He said the funds’ exist­ing invest­ments were sub­ject to mar­ket risk and volat­il­ity and he and Ms McMa­hon believed it was in the interests that the invest­ments be con­ver­ted to cash and man­aged on a con­ser­vat­ive basis to pre­serve their value.

Mr Mur­ran told the judge that enter­ing the cash man­age­ment and trust arrange­ment was an interim step while a sep­ar­ate and more detailed con­tract to deal with the ensu­ing dis­tri­bu­tion pro­cess to share­hold­ers was con­sidered. 

He said most of the funds were lis­ted for trad­ing on the Moscow Stock Exchange and the major­ity of bene­fi­cial own­ers were loc­ated in Rus­sia.

He said that for more than 99% of share­hold­ers one part of the chain of cus­tody of invest­ments was the Rus­sian National Settle­ment Depos­it­ory which, since 2022, had been a des­ig­nated entity under the sanc­tions imposed by the European Commission fol­low­ing the inva­sion of Ukraine. 

This meant the Rus­sian depos­it­ory was sub­ject to EU asset freez­ing meas­ures.