In the recent case of Re Agrenco Madeira Comercio Internacional Lda , the Court granted the Joint Liquidators' request for a declaration that they could continue the winding up despite the Company being dissolved in Portugal.
In March 2004, Agrenco Madeira Commercio Internacional Lda was incorporated in Portugal and imported, exported and distributed agricultural products internationally.
Due to increasing financial difficulties the Company ceased trading in 2008 and, following a resolution of its shareholders in August 2009, presented a Winding Up Petition in England.
In October 2009, the Court ordered that the Company be wound up in England as an unregistered company. Following the order, the Joint Liquidators received proofs of debt totalling to $446 million, with $223 million having been agreed in principle by April 2014.
The Joint Liquidators brought the present application in response to the Madeiran Offshore Registry's decision of 19 February 2014 to commence Portuguese proceedings for the involuntary dissolution and liquidation of the Company. While $2.6 million had already been realised, the winding up was not complete as there were still ongoing claims under Forward Freight Agreements.
The Court departed from the general principle that a company's status is regulated by the law of the state of incorporation. It did so relying on the statutory exception offered by section 225(1) of the Insolvency Act 1986, which allows for the post-dissolution winding up of foreign-incorporated companies that carried on business in Great Britain. After reflecting on the implications of section 225, Chief Registrar Baister was satisfied that allowing a winding up to survive dissolution was, in practice, no different from granting a fresh winding up order where a dissolution had already taken place.
In the Matter of ARM Asset Backed Securities S.A.  EWHC 1097
A stay granted under the Insolvency Act 1986 may have extra-territorial effect.
ARM Asset Backed Securities, a company incorporated in Luxembourg, was placed into Provisional Liquidation on 9 October 2013 by the English High Court. ARM's centre of main interest was in England and Wales, meaning that English insolvency law applied and ARM therefore had the benefit of an automatic stay on any action or proceedings being brought against it.
Prior to the order of 9 October 2013, the Commission de Surveillance du Secteur Financier had requested that the Public Prosecutor in Luxembourg place ARM into a liquidation process in Luxembourg. The Provisional Liquidators wrote to CSSF stating that they believed the Luxembourg Proceedings were subject to the automatic stay and that no further action could be taken without the permission of the English court. CSSF disagreed on the basis the Luxembourg insolvency proceedings, under their Securitisation Law, were not a proceeding identified within Annex B of the Insolvency Regulation.
The Provisional Liquidators applied to the English High Court for a declaration that the automatic stay applied to the Luxembourg Proceedings, that the English Proceedings constituted Main Proceedings for the purposes of the Insolvency Regulation and that, pursuant to Article 17 of the Insolvency Regulation, no further formalities were required to achieve recognition of the English Proceedings in other EU Member States.
Mr Justice Nugee considered the application and found the appointment of the Provisional Liquidators constituted Main Proceedings and was regulated by English law. Consequently Article 17 of the Insolvency Regulation applied, meaning the stay granted under s130(2) IA 1986 should apply to proceedings in any other EU Member State, including the Luxembourg Proceedings.
This case serves as a useful reminder of the effect of the Insolvency Regulation in extending the reach of the Insolvency Act 1986 when the Main Proceedings are in England.
Around the World
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