Facts
The joint liquidators of Mount Capital Fund Limited and Mount Capital Asset Subsidiary Limited applied ex parte to the Irish High Court for an order recognising the liquidation of each of the companies: In re Mount Capital Fund Limited (In Liquidation) & Ors IEHC 97, (Unreported, High Court, Laffoy J, 5 March 2012).
The liquidators were appointed by order of the Eastern Caribbean Supreme Court in the High Court of Justice of the British Virgin Islands (BVI).
Recognition of the liquidations was required in order to allow the liquidators to seek the aid of the Irish High Court for the purpose of getting in (i) all of the books and records relating to the companies; and (ii) all of the assets and property of the companies within the jurisdiction of the Irish High Court and/or within the possession, power or procurement of any person within the jurisdiction of the Irish High Court.
The liquidators indicated to the Court that, in the event that recognition was granted, they intended bringing applications under section 245 of the Irish Companies Act 1963 to summon PricewaterhouseCoopers, Deloitte and Citi Hedge Fund Services (Ireland) Ltd for examination. PwC and Deloitte had at different times acted as the companies’ auditors and had been requested by the liquidators to furnish documentation held by them in relation to the companies. The liquidators averred that the responses received to such requests were inadequate. The liquidators also required meetings with two named employees of Citi who had detailed knowledge of administration agreements entered into by the predecessors of Citi with one of the companies. They further averred that no substantive response to their meeting request had been received.
High Court Decision
Laffoy J was satisfied that the liquidators had shown a prima facia case for equivalence of approach in the power of an Irish court under section 245 of the Irish Companies Act to summons persons for examination and the corresponding provisions of the BVI legislation.
In delivering her judgment, Laffoy J considered the existing authorities on the entitlement of a court to give recognition to insolvency proceedings in another jurisdiction. She referred in particular to Lord Hoffman’s decision in Cambridge Gas Transportation Corpn v Unsecured Creditors 1 AC 508 that fairness between creditors requires the doctrine of universality to be applied to bankruptcy/corporate insolvency proceedings.
The Court was helpfully provided with the perfected order of Dunne J in the matter of David K Drumm, a Bankrupt (High Court, 13 December 2010). Laffoy J confirmed her agreement with Dunne J’s decision that the Irish High Court had an inherent jurisdiction to make the orders sought therein by the Trustee in Bankruptcy in the USA.
Laffoy J distinguished the Supreme Court’s recent decision in In re Flightlease (Ireland) Ltd (In Voluntary Liquidation) IESC 12, on the basis that its ratio decidendi is limited to situations where enforcement is sought at common law “liability to pay a sum” on foot of a judgment made by a foreign court in liquidation proceedings conducted in this jurisdiction in accordance with Irish law. The judge was satisfied that the decision does not preclude an Irish court giving recognition to orders of the type made by the BVI High Court. The judge specifically noted that relief in the nature of recognition, as distinct from enforcement, was being sought in the instant case.
Laffoy J concluded that:
“the Court does have an inherent jurisdiction to give recognition to insolvency proceedings in jurisdictions outside the European Union. However….in the exercise of that jurisdiction, the Court should be satisfied that recognition is being sought for a legitimate purpose. I believe that a legitimate purpose has been demonstrated in this case in that the objective of the Liquidators is to seek to obtain relief of the nature provided in s. 245 of the Act of 1963, having demonstrated that, there is equivalence between the law of the British Virgin Islands and the law in this jurisdiction in relation to corporate insolvency generally and, in particular, in relation to disclosure, production of documentation and such like for the purpose of performance by a liquidator of his principal duties of taking possession, protecting and realising the assets of the company and distributing the assets, or the proceeds of realisation, in accordance with law”.
Accordingly, Laffoy J made an order recognising the orders of the BVI High Court and directing that the High Court of Ireland and its officers do act in aid of the BVI High Court, in particular by giving the liquidators liberty to apply for orders under section 245 of the Irish Companies Act, and such further orders and other reliefs as appropriate. In recognition of the ex parte nature of the application, Laffoy J added the proviso that any party against whom the liquidators should apply for orders in reliance on the order should be at liberty, on notice to the liquidators, to challenge the jurisdiction of the Irish High Court to make the order insofar as it affects that party.
Contributed by Delia McMahon
