- On Dec. 19, 2025, the UK Administrative Court dismissed VTB Bank’s challenge to OFSI amendments to a sanctions General Licence affecting distributions in VTB Capital Plc’s administration.
- The ruling blocks VTB’s attempt to recover about £205 million, with administrators valuing its claim at roughly £188 million after licence-based deductions.
- The court held the amendments lawful and fair under the Sanctions and Anti-Money Laundering Act 2018, aimed at preventing priority or double recovery and protecting other creditors.
- The case highlights how UK sanctions licensing can materially reshape creditor recoveries in complex insolvencies involving frozen or trapped assets.
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The London High Court’s decision in PJSC VTB Bank v HM Treasury; VTB Capital Plc (in administration) EWHC 3359 (Admin), delivered on December 19, 2025, centered on whether the UK government, via the Office of Financial Sanctions Implementation (OFSI), lawfully amended a General Licence authorising distributions from the estate of the insolvent VTB Capital Plc. VTB Bank argued that amendments ruined its ability to make claims—raising issues under insolvency law, sanctions regulation, and human rights frameworks including Article 6 ECHR. The court rejected all of VTB’s challenges and held the amendments to be lawful, rational, fair, and consistent with statutory purpose.
Key factual tensions relate to valuation and treatment of claims. VTB submitted a proof of debt for about £205 million; administrators valued the claim at about £188 million. The gap is attributable to deductions under the General Licence amendments—e.g. for assets already under VTB’s control or pursued by it in Russian enforcement actions.
This case illustrates the breadth of regulatory risk for creditors of sanctioned entities: government regulatory action, particularly amendments to licences under sanctions regimes, may substantially erode or eliminate creditors’ recovery rights—even in established legal frameworks like UK insolvency law. This sets precedent. Further, the administration of VTB Capital Plc is described as extremely complex, involving legal issues around frozen (“trapped”) assets, creditor voting on schemes of arrangement, and several layers of international law interplay.
Strategically, the ruling may affect investment decisions regarding entities exposed to sanctions, the structuring of future credit agreements, and expectations of recovery in insolvency. For sovereign-owned banks under sanction, the decision reveals the limits of legal recourse in jurisdictions with strong regulatory control over general licensing and asset distribution. Open questions include whether VTB will appeal, how the court will treat trapped assets in practice, and how creditors will be prioritised in distributions given valuation disputes.
Supporting Notes
- VTB Bank submitted a proof of debt for approximately £205 million in claims against VTB Capital Plc.
- Administrators valued VTB’s claim at about £188 million, reflecting deductions applied under the amended General Licence.
- VTB Bank challenged the amendment to the General Licence under section 38 of the Sanctions and Anti-Money Laundering Act 2018, arguing improper purpose, irrationality, and breach of procedural fairness, including ECHR Article 6.
- The High Court (Mrs Justice Rowena Collins Rice) dismissed all of VTB’s arguments, finding that the amendment was lawful, served statutory purpose, and was not procedurally unfair.
- OFSI’s amendments to the licence were designed to preserve the orderliness of the administration, protect unsanctioned creditors, and avoid double recovery or priority unfairness from the sanctioned entity.
- The administration of VTB Capital Plc is one of the most complex on record in the UK, involving over £1.2 billion in creditor claims and frozen or trapped assets.
- The administration has been extended until December 5, 2029 to allow full resolution of creditor claims and distributions.