Founding Partners Global Fund Ltd ((in Liquidation)) Re
| Jurisdiction | Bermuda |
| Judge | Kawaley, J. |
| Judgment Date | 29 July 2009 |
| Court | Supreme Court (Bermuda) |
| Docket Number | 190 of 2009 |
| Date | 29 July 2009 |
Supreme Court
Kawaley, J.
190 of 2009
Mr. Mark Diel, Marshall Diel & Myers, for the Caymanian Joint Provisional Liquidators.
Company Law - Insolvency — Recognition of appointment of Liquidators by a foreign court in relation to companies not incorporated in Bermuda.
On June 29, 2009, pursuant to a Letter of Request from the Cayman Grand Court dated June 11, 2009, I granted an Ex Parte Order in respect of the Caymanian-incorporated company named Founding Partners Global Fund Ltd. (“the Company”) in the following terms:
“1. That the appointment of David Walker and Ian Stokoe as provisional Liquidators of the Company is hereby recognized by this court.
2. That the provisional Liquidators shall have such powers as would be available to them under the Companies Act, 1981 as if they had been appointed liquidators under a compulsory liquidation pursuant to section 170 of that Act and in particular but without prejudice to the generality of the foregoing:
(i) To locate, protect, secure and to take into their possession and control all assets and property within the jurisdiction of the Supreme Court to which the Company are or appear to be entitled;
(ii) To locate, protect, secure and to take into their possession and control the books, papers and records of the Company including the accounting and statutory records within the jurisdiction of the Supreme Court;
(iii) To retain and employ barristers, solicitors or attorneys and/or such other agents or professional persons as the Provisional Liquidators consider appropriate for the purpose of advising or assisting in the execution of their powers.
3. That anything that is authorized or required to be done by the Joint Provisional Liquidators may be done by all or any one of the persons appointed.
4. That for so long as the company remains in liquidation in the Cayman Islands, no action or proceeding shall be proceeded with or commenced against the Company or its property within the jurisdiction of the Supreme Court except with the leave of the Supreme Court and subject to such terms as the Supreme Court may impose.”
The Bermudian court has cooperated extensively with foreign insolvency courts in relation to parallel proceedings involving Bermudian companies over the last two decades. It is quite rare to receive requests for assistance from foreign insolvency courts for recognition of a foreign insolvency order in relation to companies not incorporated in Bermuda. In the absence of a Bermudian statutory framework delineating the circumstances in which judicial cooperation with foreign insolvency courts will take place, there is a need for clarity as to the content and scope of the applicable common law rules.
As this was possibly the first occasion upon which this court had exercised its common law discretionary powers to cooperate with foreign insolvency courts by recognising and assisting the foreign proceeding without commencing ancillary liquidation proceedings here, I indicated that I would give reasons for so deciding.
The Caymanian Joint Provisional Liquidators (“the JPLs”) were appointed by the Caymanian Grand Court (Foster, J.) on June 11, 2009. On the same date the Cayman Court issued a Letter of Request which exhibited a copy of the JPLs' appointment order and requested an order substantially in terms of the Order made by this court herein on June 29, 2009. The recitals to the Letter of Request described (a) the status of the Grand Court as “a court exercising jurisdiction in relation to company and insolvency law in the Cayman Islands”, (b) the Company as having been incorporated in the Cayman Islands, (c) the presentation of a winding-up petition against the company on June 12, 2009, (d) the appointment of the JPLs, and further asserted that (e) “[t]he evidence filed in the proceedings has demonstrated to the satisfaction of this Court that in order for the provisional liquidators to discharge their obligations and in order to get in and preserve the assets of the Company for the benefit of creditors it is just and convenient that this request should issue.”
In addition to requesting specific assistance by way of recognition of the status of the JPLs, empowering them to get in and preserve any Bermudian assets and ordering a stay of proceedings against the Company, the Caymanian Court also requested that:
“The Supreme Court grant such further or other relief as it thinks fit in aid of the provisional liquidators and the provisional liquidation.”
Mr. Diel supported his application by reference to the following authorities. Firstly he referred to the Isle of Man High Court decision in Re Impex Services Worldwide Ltd. [2004] BPIR 564. In this case, Deemster Doyle fulsomely articulated the reasons why the Manx Court could and should exercise its common law powers to assist the English High Court in relation to English insolvency proceedings relating to an English company. The assistance furnished took the form of recognising the foreign liquidator and permitting him to obtain evidence in the Isle of Man.
Secondly, and most importantly, counsel relied upon the leading Judicial Committee of the Privy Council decision on common law cooperation with foreign insolvency courts in Cambridge Gas Transportation Corp. v. Official Committee of Unsecured Creditors of Navigator Holdings plc and others [2007] 1 A.C. 508. This decision, also an Isle of Man case, established the important principle that the common law jurisdiction to assist a foreign insolvency court empowered the Manx Court to exercise any powers which were available in relation to an equivalent local proceeding; moreover, such assistance could be furnished without the need for ancillary winding-up proceedings to be commenced in the assisting forum. The desirability of exercising common law cooperation powers in furtherance of the policy goal of ensuring that an insolvent company's affairs should be wound-up, as far as possible, under one universal regime was confirmed by the House of Lords in McGrath v. Riddell [2008], to which counsel also referred. This case dealt with the specific issue of whether assets collected in an ancillary proceeding in England should be remitted to the principal liquidation court in Australia.
And, lastly, Mr. Diel referred to this Court's own decision in Re Dickson Holdings Limited [2008] Bda L.R. 34; (2008) 73 WIR 102, where the common law discretionary power to recognise a foreign winding-up order and the appointment of foreign liquidators was affirmed, albeit with respect to a Bermudian-incorporated company.
The common law discretionary power to recognise foreign winding-up proceedings and foreign liquidators appointed in the company's place of incorporation has been described in Fletcher, ‘Insolvency in Private International Law’, 2nd edition (Oxford University Press: Oxford, 2005) pages 2001–202, as follows:
“3.91. The case law concerning the recognition in England of foreign liquidations has been strongly influenced by the principles applied in the parallel situation of bankruptcy. However, due to the different structures of bankruptcy and winding-up procedures under our domestic law, English courts have adopted a modified position towards certain important matters. The most significant modification is with regard to the effect of a foreign liquidation upon the company's English assets, as discussed below. In the first place, however, we may note the strong parallel with bankruptcy in the general approach to recognition of foreign insolvency proceedings relating to companies. Just as the country of an individual's domicile has been traditionally regarded by our law as the ‘natural’ forum for proceedings having a bearing upon that person's civil status and capacity, including bankruptcy proceedings, so in the case of companies much importance is attached to the law of the country of incorporation in determining the essential qualities concerning the company's birth, its life, and also its demise. This philosophical leaning towards the...
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