High Court rejects bank’s conspiracy claims against Russian businessman and his UK solicitors

The High Court of England and Wales has dismissed claims brought by East-West United Bank S.A. against Russian businessman Vladimir Gusinski, his former solicitors GSC Solicitors LLP and solicitor Barry Samuels, rejecting allegations that they conspired to frustrate recovery of a multimillion-dollar loan through insolvency proceedings, arbitration and the diversion of funds. The Court found that the restructuring and liquidation measures relied upon by the bank were consistent with attempts to preserve a financially distressed business rather than a scheme to prevent repayment.

In this case, Justice Rajah considered claims arising from a loan facility extended in 2013 to New Century Distribution GmbH (NCD), a Swiss company within Mr Gusinski’s New Media Group, which produced Russian-language television content. The facility initially contemplated financing of up to US$75 million, although only US$35 million was made available for drawdown. Following repeated extensions and defaults, the bank accelerated the debt in January 2018 and demanded repayment of approximately US$9.6 million from the borrower and guarantors.

The dispute unfolded against the backdrop of deteriorating liquidity across the New Media Group. Several Russian subsidiaries entered bankruptcy proceedings in 2017, while NCD obtained a court-supervised insolvency moratorium in Switzerland in January 2018. The moratorium, subsequently recognised in England under the Cross-Border Insolvency Regulations 2006, prevented immediate enforcement while NCD attempted to restructure its obligations. The bank alleged that these proceedings, together with the redirection of revenues away from its Luxembourg account, formed part of a coordinated strategy to avoid repayment.

In parallel, the bank commenced arbitration against five group guarantors. During those proceedings, New Media Distribution Company SEZC Ltd (NMDC), the Cayman Islands holding company, recovered approximately US$5.2 million in separate High Court litigation against a former business associate, with the proceeds deposited into GSC's client account. The guarantors proposed using US$4.75 million of those funds as part of a staged repayment arrangement. In December 2018, the arbitral tribunal awarded the bank US$9.15 million, requiring US$4.75 million to be paid immediately and the balance by 31 March 2019.

No payment was made. Instead, NMDC petitioned for its winding up in the Cayman Islands in January 2019, and joint provisional liquidators were appointed. Their appointment was recognised in England, triggering a stay on enforcement. In February 2019, GSC transferred US$4.647 million from its client account to the liquidators after deducting US$103,000 for legal fees. NCD's Swiss moratorium was subsequently converted into liquidation in May 2019, and the bank submitted a proof of debt for approximately US$10.8 million in NMDC's liquidation.

The bank alleged that Mr Gusinski had orchestrated a conspiracy involving the group companies and that GSC and Mr Samuels subsequently joined it. It also claimed that representations made during arbitration had created an equitable assignment or constructive trust over US$4.75 million of the litigation proceeds, making the transfer to NMDC's liquidators a breach of trust. The Court rejected that argument, finding that the proposed payment was conditional on the tribunal adopting the guarantors' particular staged repayment proposal, which it had not done. No proprietary interest had arisen in favour of the bank.

Justice Rajah also rejected the conspiracy allegations. Although the group had undertaken a series of insolvency and restructuring measures, the evidence supported the conclusion that Mr Gusinski was seeking additional time to keep the business operating and ultimately repay the bank. The judge noted that the group had previously repaid approximately US$26 million in principal and US$6.4 million in interest, while the bank's own internal records acknowledged the group's severe financial difficulties. The bank had not established the requisite intention to injure it, whether through lawful or unlawful means.

The Court further found that the Swiss moratorium was a legitimate insolvency procedure, supervised by an independent trustee and the Swiss courts, rather than an unlawful device. It rejected suggestions that GSC and Mr Samuels had improperly advanced an unarguable defence in the arbitration, accepting that they had relied on experienced counsel and acted within their professional responsibilities. Justice Rajah expressly found that Mr Samuels had conducted himself with appropriate professionalism.

The bank's claims against Mr Gusinski for procuring breaches of contract also failed. The Court found no evidence that the relevant group companies were capable of paying their debts but had been induced by Mr Gusinski not to do so. That conclusion was reinforced by the companies' subsequent insolvent liquidations. Mr Gusinski had been debarred from defending the proceedings in March 2023 and did not attend trial, but the Court emphasised that the bank was still required to prove its allegations on the balance of probabilities.

Read the decision here.

Andrew George KC and Marlena Valles of Blackstone Chambers (instructed by Clyde & Co) acted for GSC and Mr Samuels. Clare Stanley KC and James Walmsley of Wilberforce Chambers (instructed by Distinction Law) for East-West United Bank.