Jurisdiction - Liquidation - Remuneration

On the matter of Eurodis Electron Plc (in administration): in the matter of Eurodis Electronics Plc (in administration): in the matter of Eurodis Electronics UK Ltd (in administration): in the matter of Eurodis Electron holding BV (in administration): in the matter of Eurodis Distribution Services BV (in administration): in the matter of Eurodis Texim Electronics NV/SA (in administration): in the matter of Eurodis Texim Electronics BV (in administration): in the matter of Eurodis Information Systems Ltd (in administration): Chd (Mr Justice Mann): 19 April 2011

The applicant administrators (X) of a Belgian company (T) applied for a declaration that they were entitled to continue to act as administrators in England, notwithstanding T’s ostensible liquidation in Belgium or, alternatively, a winding-up order in respect of T, their appointment as liquidators and authorisation to pay the expenses and remuneration of the administration.

T’s administration was ordered in the High Court since it had its centre of main interests in the UK, and X were appointed as administrators.

That was the main insolvency proceeding pursuant to Regulation 1346/2000, and ought to have operated, so as to prevent other insolvency proceedings being launched.

However, the Belgian court subsequently made a winding-up order in respect of T. Those proceedings were not expressed as being secondary proceedings.

When X learned of that order three months later, they asked the Belgian trustee to confirm that he recognised the English administration as the main proceedings and would not take any steps to dissolve T.

He provided no such confirmation, and later applied for an order closing the Belgian bankruptcy. That was granted and T was thereby dissolved.

The closure order was irreversible since the relevant time limits had passed. X contended that the Belgian proceedings were invalid because they failed to give proper effect to the primacy of the English insolvency proceedings as main proceedings under the regulation.

They submitted that T’s dissolution should therefore be ignored, giving it an ongoing corporate existence justifying their entitlement to continue its administration.

In the alternative, X argued that T should be wound up under section 221(5)(a) of the Insolvency Act 1986, that they should be appointed liquidators and that the court should direct that the outstanding expenses of the administration be paid as an expense of the liquidation.

Held: (1) The purpose of the regulation was to produce a degree of uniformity and consistency of approach to insolvency matters across the member states that were subject to it.

It worked by requiring the courts of one country to give effect to the orders of another, or to decline to make orders where they ought to be made in another.

It did not give the courts in one country the power to determine that orders of another were actually invalid. While it was almost certainly the case that the winding-up order should not have been made in Belgium, it was made and had to stand as a valid order of the Belgian court until set aside.

Furthermore, neither English legislation nor the regulation authorised the collection of assets of a dissolved company which was no longer in existence, Russian & English Bank v Baring Bros & Co Ltd (No 4) [1936] AC 405 HL considered.

It followed that the declaration sought could not be given (see paragraphs 17, 23-27 of judgment).

(2) The conditions for making a winding-up order under section 221(5)(a) were satisfied in the present case, and it would be right to make such an order, dispensing with advertisement. It was also appropriate to order that X become liquidators.

The court had jurisdiction to direct that the outstanding expenses of the administration be paid as an expense of the liquidation, Associated Travel Leisure and Services Ltd (In Liquidation), Re [1978] 1 WLR 547 Ch D applied.

It would be unfair if they were not paid (paragraphs 28-29).

Application granted in part.

Gabriel Moss QC, William Willson (instructed by Nabarro) for the ­applicants.