In this bulletin Karolina Lewandowska and Amy Gallimore discuss the decision in Emerald Pasture Designated Activity Co v Cassini SAS where the High Court considered the impact of the French moratorium on a borrower's obligation to provide information to a lender under a facility agreement; Katie Farmer focuses on the findings in BUJ Architects LLP v Investin Quay House Ltd as to COMI and the coronavirus test on a winding-up petition; and Nazash Asif provides updates on recent developments in the cross border space.
BUJ Architects LLP v Investin Quay House Ltd – coronavirus and COMI
In BUJ Architects LLP v Investin Quay House Ltd)  EWHC 2371 (Ch), the Court was obliged to consider a Jersey registered company’s centre of main interests (COMI) along with the financial impact of coronavirus in a petition presented on in summer 2020.
Emerald Pasture Designated Activity Co v Cassini SAS
In the recent case of Emerald Pasture Designated Activity Co v Cassini SAS  EWHC 2443 (Ch), the High Court considered whether the obligation under a loan agreement to provide information to the claimants (the Lenders) continued after the defendant (the Borrower) had entered French insolvency proceedings (safeguarding proceedings) or was caught by the moratorium which applies to safeguarding proceedings.
Following bankruptcy proceedings in Russia, the Russian trustee in bankruptcy applied to the English Courts for an order recognising her appointment. She also sought the right to take possession of and sell the bankrupt’s English assets and asked the court to vary the terms of the worldwide freezing order (WFO) to which the bankrupt was subject.
The bankrupt had previously had the WFO varied to allow him to sell his English property and apply the proceeds of sale in the sum of £35 million towards his living and legal costs.
An order was made recognising the trustee’s appointment in Russia under the common law jurisdiction rather than under UNCITRAL Model Law (as incorporated by the Cross Border Insolvency Regulations 2006), as the bankrupt did not have his centre of main interests or establishment in Russia at the relevant time, having been domiciled in England since 2017.
However, the court refused the remainder of the application as to the sale of assets and variation of WFO. While the parties agreed that moveable property in England was vested in the foreign trustee, immovable property was not. There was no authority to grant such an order under common law, so the court could not vest the assets in the foreign trustee or grant authority for her to sell the London property for benefit of the foreign bankruptcy.
Government publishes consultation paper seeking views on proposal to introduce a corporate re-domiciliation regime for UK entities
In October 2021, Department for Business, Energy & Industrial Strategy, HM Revenue and Customs and HM Treasury published a ‘Corporate re-domiciliation’ paper to further promote the UK as a leading destination for business and investment.
The proposed regime would allow non UK entitles to domicile in the UK subject to the eligibility criteria being met. The consultation asks for views on outward domiciliation for UK entities and whether it would be appropriate to set a minimum length of time before a UK entity which has moved its domicile outside the UK would be allowed to redomicile.
Under the redomiciliation scheme, entities incorporated abroad would be able to change their places of incorporation to the UK while maintaining their legal identities as corporate bodies. The benefit of the scheme is to allow companies to have continuity over business operations and reduce the administrative complexity of relocating to and incorporating in the UK.
The paper also seeks views by 7 January 2022 on what protections should be adopted to prevent abuse of the system, as importing companies also come with conduct of its directors and others with significant control - for example, where a company redomiciles in the UK and then enters liquidation soon afterwards, potentially leaving creditors’ claims defeated by the exporting jurisdiction.
Amicus Finance restructuring plan approved
Amicus was a short-term property finance company which entered administration in December 2018
The restructuring plan was put forward by the administrators as they deemed there was not enough cash to continue to fund the administration, as Covid-19 and Brexit had a major impact on realisations. The plan was to restore the company as a going concern and exit the administration via Part 26A restructuring plan.
Crowdstacker Corporate Services Limited (Crowdstacker), a secured creditor, opposed the plan. However, the court for the first time used the cross-class cramdown to override the security rights of a junior secured creditor and sanctioned the restructuring plan, deciding that Crowdstacker would not be worse off than in the relevant alternative, which in this case was found to be Amicus's liquidation.
The sanctioning of the restructuring plan shows that it can be successfully utilised by middle market companies and also that it can be used as an exit route out of administration.