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Former property magnate and bankrupt William Stern has been granted a stay to avoid paying almost £600k in interest on the £1.25m that he was ordered to pay a creditor in 2005.
Stern applied for the stay on the ground that the creditor, Saudi investor Abdul Ghani El Ajou, was bound by a voluntary arrangement (IVA), entered into between Stern and his creditors, not to enforce the order.
Kitchin J said: “The existence of the IVA does constitute a special circumstance that would render it unjust to allow the order for interest to be enforced against Mr Stern while the IVA subsisted.”
In October 2002, the IVA was approved by Stern’s creditors, who were therefore taken to have agreed that they would have no further claims against him in respect of debts that were provable. It also applied to interest on those debts.
In 2005, the High Court ruled that El Ajou held a “priority” claim to part of the sale proceeds from a Brussels development site controlled by Stern and should be paid £1.25m together with interest.
The site, known as lot 68 abords de la Gare du Nord, near the Gare du Nord, was owned by one of Stern’s companies, Dollar Land Holdings (DLH), and was subject to several mortgages.
In 1996, Stern and DLH entered into an agreement with El Ajou that, once the mortgages had been paid in full, El Ajou would be entitled to £1.5m of the sale proceeds in order to satisfy part of a £5.5m judgment debt owed by DHL to El Ajou.
However, following the sale of the property to a subsidiary of Atenor Group, the lenders entered into various settlements with DLH, which then refused to pay El Ajou on the basis that the mortgages had not been discharged “in full”.
El Ajou v Stern and others Chancery Division (Kitchin J) 1 December 2006.
Sally Barber (instructed by Zaiwalla & Co) appeared for the claimant; Simon Mortimore QC (instructed by Michael Conn Goldsobel) appeared for the defendant.
References: EGi Legal News 04/12/06
