Some news and views from UK academia and practice on the law, policy and practice of insolvency
Wednesday, 11 May 2011
Schemes of Arrangement and COMI - Rodenstock GmbH (The "Scheme Company"), Re  EWHC 1104 (Ch) (06 May 2011)
Mr Justice Briggs (pictured) has handed down his judgment in Rodenstock GmbH (The "Scheme Company"), Re  EWHC 1104 (Ch) (06 May 2011). The case concerned a scheme of arrangement in an insolvency environment. As the learned judge observed: "Due to an apprehension that, if the Scheme is not sanctioned, the Company may be unable to avoid insolvency significantly beyond the end of April, both stages of the court proceedings relating to the Scheme have been undertaken with considerable urgency, with a view to obtaining the court's decision before the end of term, and the onset of the Easter holiday period on 22nd April 2011. The sanction hearing therefore took place on 19th April 2011, and after considering the matter and concluding that the Scheme ought to be sanctioned, I made the appropriate order on 21st April 2011, stating that my reasons for doing so would be provided thereafter in a reserved judgment."
The judgment contains some interesting analysis of how the insolvency laws and COMI sit with schemes of arrangements. The learned judge notes: "It is apparent therefore that the Insolvency Act confers jurisdiction on the court to wind up both insolvent and solvent unregistered companies, with no express jurisdictional restriction referable to the company's place of incorporation, COMI or establishment. The court did not, however, treat the very broad provisions of the Insolvency Act (formerly in the Companies Acts) as giving it carte blanche to wind up foreign companies, regardless of the presence or absence of any connection with England, or of the utility or otherwise of making a winding up order. On the contrary, there evolved three judge-made conditions for the making of a winding up order in relation to a foreign company namely:
i)that the company had a sufficiently close connection with England usually, but not invariably, in the form of assets within the jurisdiction;
ii)that there was a reasonable possibility of benefit accruing to creditors from the making of a winding up order; and
iii)that one or more persons interested in the distribution of assets were persons over whom the English court could exercise jurisdiction.
See Real Estate Development Co  BCLC 210, per Knox J at 217, approved by the Court of Appeal in Re Latreefers Inc  BCC 174."