Petropavlovsk - Case Update

Petropavlovsk PLC, the parent of a group of gold mining companies operating in the far east of Russia, has officially moved into creditors’ voluntary liquidation to enable a dividend to potentially be paid to the company that acquired its Russian subsidiaries.

Petropavlovsk entered administration in July 2022, after its ability to operate was impaired due to international sanctions and other restrictions resulting from Russia’s invasion of Ukraine.

The shares in the majority of Petropavlovsk’s subsidiaries were sold to UMMC-Invest (now renamed Atlas Mining), an affiliate of Russian metallurgical company Ural Mining and Metallurgical Company, in September 2022 in a deal worth $600 million. Atlas Mining became a subordinated creditor of Petropavlovsk as a result of the deal.

A scheme of arrangement was also approved during the administration which provided for payment to different classes of creditors, including bondholders, noteholders and trade and expense creditors. Almost all known creditors have been paid in full under the scheme.

As a result, the liquidation will enable one or more distributions to Atlas Mining. Atlas Mining has undergone a corporate restructuring, and a preliminary view has been formed that a distribution to Atlas Mining would not be in breach of UK sanctions legislation. The liquidators will confirm this view before making any distributions.

Allister Manson, Trevor Binyon and Joanne Rolls of Opus are the joint administrators / liquidators. Their final progress report can be found HERE. They have been assisted by Joseph Hage Aaronson in relation to legal issues surrounding the sale and sanctions; insolvency counsel (Peter Arden KC and Joseph Wigley) and sanctions counsel (Jim Sturman KC) to provide specialist advice and representation; DAC Beachcroft to deal with an outstanding employee claim; Isadore Goldman in relation to the company’s leasehold interest in its trading premises; and Shoosmiths relating to employment matters.