UK Court Blocks VTB’s £205M Recovery Claim Amid Sanctions & Insolvency Rift

In late 2025 the UK High Court delivered a significant judgment in PSJC VTB Bank v HM Treasury EWHC 3359 (Admin), dismissing VTB Bank’s challenge against amendments to a General Licence by HM Treasury’s Office of Financial Sanctions Implementation (OFSI). These amendments altered how VTB’s claims in the administration of its UK unit, VTB Capital Plc, would be treated under UK insolvency law. VTB contended that the reforms, made earlier in 2025, had a “catastrophic” impact by erasing its claims, amounting to an unlawful deprivation under sanctions legislation. However, Justice Rowena Collins Rice found none of VTB’s grounds demonstrated unlawfulness, and accordingly dismissed the claim. [1][6]

The financial stakes are substantial: VTB submitted a proof of debt for about £205 million, while the administrators valued the claim at roughly £188 million. The discrepancy reflects contested valuation and possibly differing recognition of certain claims under changed regulatory rules. Regardless, the court’s decision bars VTB from leveraging its claim at the higher figure or recovering damages relating to lost claims due to rule changes. [2][1]

Administrators led by Teneo Inc have described this insolvency as among the most complex ever in UK legal history, owing to the intersection of international sanctions, statutory regulation via OFSI, insolvency law, and company law. Key challenges include dealing with ‘trapped assets’—for example securities in Russia’s National Settlement Depository—and creditor claims totaling over £1.2 billion. The administration process has been extended until December 5, 2029, reflecting the scale and legal complexity. [2][8][0news13]

Strategically, the ruling underscores several implications: first, government regulatory action under sanction regimes can substantially affect creditor rights, often in ways that are legally sustained. Second, creditors in similar circumstances should closely monitor such amendments and their licensing regimes, as they may face sharply reduced recoveries. Third, this case may influence how future insolvency administrations involving sanctioned entities are structured—particularly in terms of timing of rule changes, transparency, and litigation risk. Moreover, there may be reputational, diplomatic, and investment policy spillovers, as courts balance sanction compliance with legal principles of fairness and property rights.

Open questions arise regarding possible appeals by VTB, what exact treatment will be accorded to VTB’s “trapped assets” in Russia, how dividends will be calculated for creditors given the valuation disputes, and whether similar precedents may affect other sanctioned Russian institutions undergoing UK insolvency. Also, whether OFSI or HM Treasury may face future judicial review challenges over licensing decisions under the Sanctions and Anti-Money Laundering Act 2018 remains to be tested. [6][7][8]