Cross Border Insolvency Bulletin - July 2021

It has been over six months since the Insolvency (Amendments) (EU Exit) Regulations 2019 came into force and the benefit of automatic recognition of insolvency proceedings as between Member States and the UK was lost. In this bulletin we take a closer look at the recent decisions concerning recognition of foreign proceedings in England and Wales which highlight the supportive and flexible approach of the English courts: Holly Ransley and Alan Bennett discuss the decision in Re PJSC Bank Finance and Credit concerning recognition of the Ukrainian bank’s liquidation ; Karolina Lewandowska and Amy Gallimore focus on the case of Re Greensill Bank AG and the position of EEA credit institutions post-Brexit under the Cross-Border Insolvency Regulations 2006; and Olivia Reader provides an update on recent developments in the cross-border space.

Re Greensill Bank AG [2021] EWHC 966 (Ch)

In the recent case of Re Greensill Bank AG, the High Court helpfully clarified that, following Brexit, EEA credit institutions may apply for recognition of foreign insolvency proceedings under the UNCITRAL Model Law as enacted in England & Wales by the Cross-Border Insolvency Regulations 2006 (the Model Law). The court also considered and granted further requests of a foreign representative in the spirit of continuing mutual assistance between the UK and the Members States post-Brexit.

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Re PJSC Bank Finance and Credit (in liquidation) Groshova (in her capacity as authorised officer of the Deposit Guarantee Fund of Ukraine in respect of the liquidation of PJSC Bank Finance and Credit) v Deposit Guarantee Fund of Ukraine [2021] EWHC 1100 (Ch)


PJSC Bank Finance and Credit (the Bank) entered provisional administration in Ukraine in September 2015 and went into liquidation in December the same year.

It appeared, following investigations, that the Bank may have had involvement in a multi-million dollar fraud leading to funds being sent overseas to various entities.

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Short Stories

Re DTEK Energy BV and DTEK Finance PLC [2021] EWHC 1551 (Ch)


DTEK Energy B.V. and DTEK Finance PLC applied to the English High Court to sanction their inter-conditional schemes of arrangement (the Bank Scheme and the Note Scheme respectively). Gazprombank (Switzerland) Limited (Gazprombank) objected to the Bank Scheme, despite 95% of creditors approving it, on the basis it was unfair to Gazprombank as to its rights against other guarantors or sureties with other DTEK Group companies in respect of the CHF21,629,302 (£16.9 million) due to it, and that the effectiveness of the Bank Scheme in certain countries would be questionable.

The Court held that Gazprombank was unable to show that it was in a significantly stronger position for repayment of its loan than any other Bank Scheme creditor. Its ‘fairness’ challenge was rejected.

As to the scheme’s effectiveness, having considered the evidence, the Court was satisfied that there was a reasonable prospect of the Bank Scheme having substantial effect in the Netherlands and Cyprus, both as regards the 95% of supporting creditors and Gazprombank itself: the Bank Scheme would be given effect in every EU Member State by virtue of Art 12(1)(d) of Rome I, or alternatively as a matter of private international law. Further, the UK and Singapore had both subscribed to the UNCITRAL Model Law and so there would be no difficulty with recognition in Singapore either.

The Court therefore sanctioned both schemes.

New English moratorium not recognised in Australia as a foreign proceeding: Hydrodec Group Plc wound up

Hydrodec Group plc, a public company incorporated in England & Wales but registered to carry on business in Australia, was ordered to pay AUS$1.6 million to an Australian company. Following an unsatisfied demand, a winding up petition was presented against Hydrodec in Australia. Hydrodec subsequently entered into the recently created stand-alone moratorium procedure in England under the Insolvency Act 1986, and monitors were appointed. Hydrodec’s principal asset was its indirect ownership of a valuable subsidiary in the US. The monitors claimed this asset was in the UK, being the location of the shares in a holding company.

The monitors applied for recognition of the English moratorium as a foreign proceeding under the (Australian) Cross-Border Insolvency Act 2008 and a stay of the Australian winding up proceedings, arguing Hydrodec’s centre of main interests (COMI) was in England, being the location of its registered office, directors, shareholding of the US subsidiary and majority of its creditors. This was rejected by the court, as the company also had an Australian registered office. The court found that the COMI was in fact in the US, the location of the group’s only trading entity, and therefore the English moratorium did not constitute a foreign main proceeding.

The court ordered that Hydrodec be wound up in Australia, finding that it was insolvent and the moratorium did not provide any plan for rescue, and therefore there would be no better outcome to creditors. Winding up avoided the risk of a director being granted security and improving his position as a creditor, and meant a liquidator could investigate any potential voidable transaction claims for the benefit of creditors.

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