Recognition of foreign insolvency proceedings

A judicial administrator appointed under Brazilian law sought recognition of the extension of his appointment to two other companies on a provisional basis together with an order that documents in the possession of a UK company were delivered up to him under s. 236 of the Insolvency Act 1986.

The court first had to be satisfied that it could recognise the appointment under the Cross Border Insolvency Regulations 2006. The particular procedure here had no equivalent under English law – it involved “extending” the insolvency proceedings to two further entities and effectively pooling their assets together. Under Article 2(i) of the UNCITRAL Model Law, foreign proceedings must be collective in nature in the sense the company’s assets were being administered for the benefit of its own creditors, and not for the benefit of another entity’s creditors. 

In considering whether recognition was possible here, the court applied Agrokor DD [2017] EWHC 2791 (Ch) which had held that it was possible for recognition to be obtained in relation to group insolvency proceedings – a procedure which does not exist under English law – otherwise there would be a significant hole in the options available for foreign recognition. Furthermore, the English courts can, in exceptional cases, order that two insolvent entities were pooled together. Therefore, the fact there was some pooling involved was not a bar to recognition.

Having concluded the proceedings should be recognised, the judicial administrator could then seek any relief available to an officeholder in England including under s. 236 Insolvency Act 1986.

Re Industria De Alimentos Nilza SA & Ors [2020] EWHC 3560 (Ch)

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