Background – As Things Currently Stand

The aim of EC Regulation on Insolvency Proceedings 2000 (the Regulation) is to improve the efficiency of insolvency proceedings with cross-border implications. It provides, within the EU, rules for determining:

Background

As things currently stand

The aim of the EC Regulation on Insolvency Proceedings (1346/2000) (Regulation) is to improve the efficiency of insolvency proceedings with cross border aspects. It provides, within the European Union (EU), rules for determining:

In the latest decision on COMI (Northsea Base Investment Limited & ors [2015] EWHC 121 (Ch)), the English Court had to determine the centre of main interest for a  group of companies registered in Cyprus, but where the operations of the companies were managed by a shipping agent in London.

Key Point

The mere fact that the law of the country in which an asset is situated does not recognise the trust concept does not necessarily invalidate the trust at least as far as English Courts are concerned.

The Facts

The UK court recently considered the extent of s236 Insolvency Act 1986 (“IA 1986”) in the case of Re Comet Group Ltd (in liquidation); Khan and others v Whirlpool (UK) Ltd and another [2014] EWHC 3477 (Ch).

Key Points 

• Phones 4U went into administration in September 2014.
• Technology companies in the US have also faced a difficult market.
• Phones 4U’s complicated financing structure contributed to its downfall, as did its reliance on one or two key suppliers.
• The Protection of Essential Supplies Order will have considerable ramifications for tech suppliers when it comes into force.

PHONES 4U COLLAPSE: PART 1

Key Points

• The principle of modified universalism (being the principle underlying the common law power to assist foreign insolvency proceedings) continues to exist
• There is a common law power to order production of information to assist foreign insolvency proceedings
• Common law assistance does not enable office holders to do something they would not be able to do under the insolvency laws by which they are appointed

The Facts

Key Points

• Court cannot grant relief under the UK Cross Border Insolvency Regulations 2006 (CBIR) where it could not provide such relief in a domestic insolvency.
• Even if such option were possible, court would not do so where a contract is governed by English law.
• Possibility of effectively applying provisions of foreign law under the CBIR restricted.

The Facts

Key Points

Where a sole director and shareholder of a company had breached fiduciary duties he could not ratify the breach if the company was insolvent;

Claims against the company in liquidation by dishonest assisting parties could not be set off under rule 4.90 Insolvency Rules against any liability they had in damages for that assistance.

The Facts

In Re Lehman Brothers International (Europe) (in administration) and others [2014] EWHC 704 (Ch), the High Court ruled on issues regarding the order of distributions and payments in the administration and potential liquidation of various Lehman entities. This wide-ranging judgment gives clarity on a number of previously uncertain issues.