English High Court places US company into Administration
Monday, 31st October 2016
On 7 October 2016 Ashfords' Restructuring and Insolvency Team, led by partner Alan Bennett, assisted the directors in securing an Administration order in respect of Ronin Development Corporation (the "Company").
The Company was incorporated in Princeton, New Jersey, in October 1986 under the New Jersey Business Corporation Act, and is a global marketing, consulting and research company.
Given the Company had its registered office overseas it was necessary to rebut the presumption set out in paragraph 111(1B) of Schedule B1 of the Insolvency Act 1986 that, at the date of the request to open insolvency proceedings, the Company's Centre Of Main Interests ("COMI") was located in the US, and to show instead that the COMI is located in the UK.
The Court considered several factors in coming to their decision as to whether the presumption in paragraph 111(1B) had been successfully rebutted:
- Firstly, the Company had operated a London branch for 20 years, and had, since incorporation, transferred most of its operations to the UK. In 2015 the Company's US office was closed and in fact the Company currently only has one employee in the US. Meanwhile the London branch of the Company currently employs around 60-80 people and houses the Company's operating managing director.
- All of the Company's physical assets, bar two computers, are located in the UK and it is the Company's UK bank accounts that have conduct of the majority of the Company's transactions. More financial evidence in support of the application was found in the fact that the Company pays corporation tax in the UK but not in the US, and also in the fact that all clients are invoiced from the London office using the London office address.
- Finally, the directors supplied the Court with a list of the Company's creditors, the majority of which are UK suppliers, and several of whom have already brought proceedings against the Company in the UK.
These factors, together with proof of the Company's inability to pay its debts, were sufficient to convince the Court to rebut the presumption in paragraph 111(1B) and make an order for Administration. As requested, the Court duly appointed Ian Robert and Brian Baker of Kingston Smith and Partners as joint administrators of the Company who subsequently traded the business before selling it as a going concern.