In this bulletin, Olivia Reader focuses on the decision in Kireeva v Bedzhamov where the Court of Appeal recently considered the immovables rule; Alan Bennett also discusses the judgment of the Court of Appeal in Windhorst v Levy dismissing an appeal against a registration order and granting a conditional stay of execution; and Luke Fitton provides an interesting update on recent decisions in the restructuring and insolvency space.
The Court of Appeal recently considered immovable property in relation to a Russian bankruptcy, by a majority declining to appoint the Trustee as receiver of the Bankrupt’s £35m property. In addition it was held that the High Court had been wrong to reject evidence in relation to the validity of the Russian bankruptcy without cross-examining the witness.
Read Ashfords' comments on the case here.
In the recent case of Windhorst v Levy [2021] EWHC 1169 (QB), the Court of Appeal considered an appeal against an order of Mrs Justice Eady dated 6 May 2021 dismissing Mr Windhorst's (the Appellant) appeal from a registration order dated 17 August 2020 (the Registration Order) and an application for a stay pursuant to CPR 83.7(4).
The case was considered pursuant to Council Regulation 44/2001/EC of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels I Regulation) and Council Regulation 1346/2000/EC of 29 May 2000 on insolvency proceedings (the Insolvency Regulation).
A Bermudian company wished to reorganise its funding structure but was unable to do so without amending its bylaws. Pursuant to a shareholders' agreement, such an amendment required a unanimous affirmative vote by all shareholders. However, a unanimous vote was impossible as one of the shareholders was unable to exercise voting rights. The company therefore sought, through a scheme of arrangement, to introduce an additional procedure allowing a resolution to be passed with 90% approval, provided that no shareholder voted against.
The Court gave permission for the company to convene a meeting of its members in order to consider the proposed scheme of arrangement. While such a scheme might usually be expected to take place in the country of incorporation, the Court held that there may be an exception in cases of this kind where inter-dependent, parallel schemes are proposed in both the place of incorporation and in England and Wales. The English court had territorial jurisdiction to approve a scheme of arrangement in respect of an overseas company but would not exercise it unless there was a sufficient connection with England. In this case, the company was making a parallel application to the Bermudian court and it was proposed that the two schemes should run in parallel and be inter-conditional. The Court was therefore satisfied that the foreign incorporation of the company did not present a jurisdictional "roadblock" which would make it impossible for the Court to approve the scheme at the sanction hearing.
When an individual enters into bankruptcy the general rule under UK law is that approved pension arrangements do not fall within the estate which the trustee in bankruptcy (TiB) can use to satisfy the bankruptcy debts. In this case the respondent was an Irish citizen who was made bankrupt in England and but had rights under an Irish retirement policy. The TiB’s argued that the respondents rights under the policy should be included in the bankruptcy estate, however the respondent asserted that the provisions were discriminatory between UK nationals and EU nationals in that they failed to accord the same treatment to Irish pension schemes. The Court of Justice of the European Union held that s11 of the Welfare Reform and Pensions Act 1999 was incompatible with art 49 of the Treaty on the Functioning of the European Union unless it could be justified. The respondent also argued that as justification had not been raised as an issue in proceedings the preliminary issued should be determined in his favour. The European Court of Justice found in favour of the respondent and refused permission for the applicants to raise the new justification issue thereby granting a declaration that the interest in the Irish pension were to be excluded from the bankruptcy estate.
Cassini SAS (the Borrower) appealed the decision of His Honour Judge Kramer given on 27 August 2021 (discussed in our article here) that the information obligation under the Facility Agreement continued during the French Insolvency procedure known as safeguarding proceedings. The Court of Appeal has found that the High Court judge took the correct approach and dismissed the appeal. When deciding between the French law expert instructed on behalf of the Lender and the expert advanced by the Borrower the Judge sided with that of the Lender but noted that as French insolvency law is evolving expert opinions into this topic might differ in future cases.
For more information on this bulletin, please contact our Restructuring & Insolvency team.
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