Knowledge

The Royal Court of Jersey (the "Court") has handed down judgment giving reasons for the first appointment of provisional liquidators ("PLs") in Jersey over RTI Limited ("RTI").

The background to the underlying dispute between OWH SE i.L ("OWH") and RTI is set out in our previous briefing, available here.

On 3 October 2024, an LCIA arbitration tribunal handed down a EUR 213m award in OWH's favour against RTI, a Jersey company, and its ultimate parent, Russian entity United Company Rusal International PJSC ("Rusal"). OWH sought to enforce the award in Jersey against RTI, obtaining a world-wide freezing and disclosure order ("WWFDO") on 18 November 2024.

RTI's challenges to the WWFDO and to enforcement of the award in Jersey failed (although RTI is still appealing the latter), and in June 2025 RTI finally provided disclosure of its assets (see the Court's judgment here).

Upon disclosure and further correspondence, it became clear that, in late September 2024, shortly before the award was handed down, RTI had transferred at least $166m to another Rusal group company, leaving total assets of less than 10% of the award. RTI's lawyers said that this was done as part of a general restructuring.

The Court's approach

Given the dissipation of assets, OWH applied to appoint PLs to preserve any potential clawback claims. RTI conceded that OWH had standing to make an application for a creditors' winding up, notwithstanding the appeal against enforcement of the award in Jersey, in light of the Jersey Court of Appeal's previous decision in HWA 555 Owners LLC v Redox Plc S.A. [2023] (2) JLR 1 (which held that unless and until the appeal was successful, the decision at first instance stood, for these purposes).

In the absence of Jersey jurisprudence, the Court agreed with OWH's submission that it was appropriate to look at English authority on the appointment of PLs. The Court quoted extracts of the English textbook McPherson and Keay's Law of Company Liquidation (5th Ed), which noted that it was a draconian power, with the following cited as potential factors in favour of exercising it:

• the assets and affairs of the company being in jeopardy, primarily because the directors and/or shareholders may dissipate the assets while the petition is pending;
• the ultimate effect of leaving the assets in the hands of the company may be that the creditors and/or members will be disadvantaged in the event of an eventual winding up order; and
• the usual concern is the attitude of the directors, and a need to displace them from their position of authority to deal with the assets.

McPherson and Keay further states that the degree of urgency, the need established by the applicant and the balance of convenience will all be relevant criteria.

The Court also endorsed principles set out by the English Court of Appeal in Revenue and Customs Commissioners v Rochdale Drinks Distributors Limited [2011] EWCA Civ 1116 to the effect that:

• the appointment of PLs was an order not to be made lightly, especially in relation to a trading company where such an order will likely have a terminal effect on a company's trading life; and
• the applicant must demonstrate that it is "likely" to obtain a winding up order on hearing the winding up application (in the sense of more likely than not, on the balance of probabilities).

In the present case, RTI was not a trading company and appeared to be undergoing some form of restructuring. The Court found that there were serious questions about why a loan of $166m was repaid shortly before the arbitration award was to be released, and whether, as alleged, some form of asset stripping had occurred. RTI's evidence lacked detail and begged more questions than it answered. This warranted investigation and steps being taken to preserve assets. The Court agreed with OWH that, if matters were to be left until the creditors' winding up application was resolved, the trail would likely have "gone cold". Investigations, and any steps to preserve assets, needed to take place as a matter of urgency.

The English case law places emphasis on an urgent need to preserve assets, rather than (for example) a general need to investigate. This case is unusual because the assets requiring preservation were not tangible property, but rather potential claims to recover property which had already been transferred away (the directors of the company apparently taking the view that no such claims existed).

In appointing the PLs, the Court made orders preserving the rights of the directors of RTI to pursue the appeal against enforcement of the award in Jersey, and to challenge the appointment of the PLs. It also made orders preserving the privilege of RTI's legal advice as against OWH.

Bedell Cristin successfully acted for OWH in its application for the appointment of PLs. The full judgment (OWH SE i.L v RTI Limited [2025] JRC 204) can be found here.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.