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Marcellus Kooter v (1) The Official Receiver, (2) Manuela Radeva, (3) Simon Underwood and Laurence Pagden (as trustees in bankruptcy) – A review by Lauren Kreamer

On 22 March 2023, Deputy Insolvency and Companies Court Judge Agnello KC handed down judgment in the matter of Marcellus Kooter v (1) The Official Receiver, (2) Manuela Radeva, and (3) Simon Underwood and Laurence Pagden (as trustees in bankruptcy), on an application made by the former trustees in bankruptcy of Ms Radeva relating to their costs, expenses and remuneration. Lauren Kreamer acted for the trustees and was instructed by Julian Dobson at Julian Dobson Solicitors.

Ms Radeva had applied for her own bankruptcy and an adjudicator made a bankruptcy order in March 2019. Mr Kooter, who was owed 99.5% of the overall total due to creditors, applied for the bankruptcy order to be annulled in July 2019. After a number of adjournments, the bankruptcy order was annulled in October 2022 as of right where the debtor’s COMI was found not to be in England and Wales. Deputy ICC Judge Agnello KC found that a document purporting to be a certificate evidencing completion by Ms Radeva of an MBA at Birkbeck, University of London, tendered by her as evidence of her habitual residence being in England and Wales, was not genuine. The Judge ultimately found that Ms Radeva – who had falsely represented herself to Mr Kooter as an investment manager, thereby persuading him to ‘invest’ a sum of c. £200,000 with her – had attempted to create an illusion of habitual residence in England and Wales.

You can read the earlier judgment, here.

A further hearing was listed for December 2022, to allow the trustees to make applications in relation to their costs, remuneration and expenses. The Judge had little difficulty in ordering that Ms Radeva should be liable for the trustees’ remuneration, costs and expenses of the bankruptcy; those, she said, followed from the annulment application where the debtor had “misrepresented where her COMI was located” such that “there was no jurisdiction to make the bankruptcy order.” In circumstances where Ms Radeva had actively sought to mislead the court, including by way of the forgery of documents, costs were ordered against her on the indemnity basis.

The trustees also sought that a proportion of their legal costs, as well as their remuneration, costs and expenses of the bankruptcy, be paid by Mr Kooter. That was, in no small part, because the evidence before the court made clear that Ms Radeva would be unlikely to meet the costs order made against her. The Judge accepted that these are cases where there is “no really just result bearing in mind that the real culprit is snot before the Court”. She held that an order that Mr Kooter be liable for a specific sum towards the trustees’ costs, remuneration and expenses was a fair and just outcome.

This was an unusual application, in that it pertained to a successful annulment application on jurisdictional grounds made by a creditor in relation to a bankruptcy order made on the application of the debtor, circumstances which the Judge held made this case quite different from authorities such as Butterworth v Soutter and Oraki v Dean. This judgment will therefore provide useful guidance to trustees in a similar position in relation to their level of involvement and work in cases where jurisdictional challenges are on foot, as well as to creditors considering whether to seek to annul a bankruptcy order and assessing their own level of costs risk in so doing.

You can read the judgment, here.