Petropavlovsk Liquidators Cleared to Approve US$40 Million Assignment Despite Russian Sanctions

The liquidators of former Russian gold miner Petropavlovsk plc can consent to the assignment of certain liquidation rights from sanctioned creditor Atlas JSC to Dubai-based Denali Corp-FZCO, without breaching UK sanctions law, the High Court has ruled.

Petropavlovsk (Petro) went into administration in 2022 and creditors' voluntary liquidation in 2024, with Allister Manson, Joanne Rolls and Trevor Binyon acting throughout as administrators, then liquidators. Under a 2022 sale of its Russian mining assets, Atlas holds a bundle of contractual rights tied to the liquidation, including a claim to any surplus once other creditors are paid, and residual claims over two reserve funds set aside for administration costs and contingencies, together estimated by the parties at US$30 to 40 million. Atlas has since been designated a sanctioned entity, which is what triggered this dispute: in April 2025, before its designation, Atlas assigned those rights to Denali as consideration for Denali agreeing to terminate a heavily loss-making gold contract with an Atlas subsidiary, JSC Pokrovskiy Mine. That assignment needed Petro's consent to take effect, and once Atlas became sanctioned, the liquidators wouldn't give it without a court ruling first.

Why it matters: UK sanctions restrict dealings with both the "funds" and "economic resources" of designated persons, but what counts as a prohibited dealing differs between the two. Dealing with funds includes transferring them or changing their ownership or possession, while dealing with an economic resource requires exchanging it, or using it in exchange, for funds, goods or services. This decision shows uncertain, contingent liquidation rights can count as economic resources, though the judge stressed these particular rights sat close to the boundary between the two categories.

The ruling. The court first addressed the liquidators' earlier concern about exactly what Atlas had assigned. They had initially considered whether the assignment might cover Atlas's underlying term loan, which could carry with it the benefit of Atlas's proof of debt and an already-declared but unpaid dividend of nearly £19 million. By the hearing, however, the liquidators no longer maintained that interpretation. The judge agreed that the assignment covered only the separate contractual rights, not the term loan, proof of debt or dividend.

Turning to the sanctions question, the judge applied Court of Appeal authority (PJSC National Bank Trust v Mints). The court treated uncertainty as the deciding factor. Unlike assets ordinarily classed as funds, which are generally for a liquidated or definite sum, Atlas's rights depended on an unknown future liquidation surplus and contingent residual amounts that could not yet be calculated. That made them an "economic resource," not a fund. From there, the judge found the liquidators' consent itself wouldn't count as "dealing with" that resource, since they weren't party to the Atlas-Denali transaction and weren't exchanging or using the rights for funds, goods, or services.

Outcome. The judge invited both sides to agree an order giving effect to the ruling, noting Atlas had already received all the benefits due to it under the 2025 arrangements. Allowing consent would therefore let Denali receive the agreed consideration, rather than place fresh assets in the hands of a sanctioned party.

Enyo Law LLP acted for Denali Corp-FZCO. Joseph Hage Aaronson & Bremen LLP acted for the liquidators.

Case: Denali Corp-FZCO v Manson & Ors [2026] EWHC 2287 (Ch). The judgment was handed down on 4 September 2026.