Titan Europe 2007-1 (NHP) Limited - Irish Stock Exchange

transaction that included the creation of the floating charge (although insolvency is presumed if the
parties to the transaction are connected).
(e) Setting aside transactions defrauding creditors. At any time prior to the relevant insolvency
proceeding, a transaction at an undervalue can be challenged if its substantial purpose was either to put
assets of the company beyond the reach of creditors or otherwise prejudice their interests. Proof of
insolvency at the time of the transaction is not required.
Company Voluntary Arrangements. A company voluntary arrangement under Part I of the Insolvency Act
1986 is a formal procedure which enables a company to agree with its creditors a composition in satisfaction of
its debts or a scheme of arrangement of its affairs which can determine how its debts should be paid and in what
proportions. It requires the approval of a majority in excess of 75 per cent. in value of the company’s creditors
present in person or by proxy and voting at a meeting on the resolution to approve the arrangement. If a
company voluntary arrangement is approved, it binds all creditors of the company who were entitled to vote at
the meeting (whether or not they were present or represented at it) or would have been so entitled had they
received notice of the meeting.
If a borrowing company falls within the definition of a “small company” under the Companies Act 1985
and Insolvency Act 1986, a moratorium may be obtained to hold creditors in abeyance whilst the terms of an
arrangement are negotiated and agreed between the company and its creditors. The moratorium has the same
affect on the rights of creditors to enforce their security rights as outlined in the section headed
‘Administrations’ above.
A moratorium may be imposed for a period of up to 28 days, with the option for creditors to extend this
protection for up to a further two months (although the Secretary of State for Trade and Industry may, by
secondary legislation, extend or decrease the duration of each period). This may be relevant both in the context
of a borrower or significant concentrations of tenants that may fall within the definition of “small company”.
The reason is that the moratorium applicable to small companies could result in delays in receipt of payments by
the borrower and/or prevent a borrower landlord re-entering and taking possession of a property upon nonpayment
of rent.
Borrowers Formed in Foreign Jurisdictions. Where an insolvent company has its centre of main interests
(“COMI”) in the European Union, the jurisdiction of the English courts to make winding-up or administration
orders with respect to that company is governed exclusively by the EC Regulation on Insolvency Proceedings
2000. This is so regardless of whether the company is incorporated in the European Union. The EC Regulation
also applies to company voluntary arrangements, but has no application to administrative receiverships.
The EC Regulation applies only to proceedings where the debtor’s COMI is located in the European Union
and it recites that the debtor’s COMI should correspond to the place where it conducts the administration of its
interests on a regular basis and provides that, in the case of a company, the place of its registered office shall be
presumed to be its COMI in the absence of proof to the contrary.
The EC Regulation confers jurisdiction on the English courts to open “main” insolvency proceedings,
including winding-up and administration proceedings, in respect of a company (including a foreign company)
having its COMI in England and Wales. Pursuant to the EC Regulation, “main” insolvency proceedings are
intended to encompass the debtor’s assets on a worldwide basis and to affect all creditors, wherever located,
subject as described below. Where the debtor has an “establishment” in a Member State, “territorial”
proceedings may be opened in that State, which are “secondary” proceedings (and winding up proceedings only)
where “main” proceedings have already been opened in another Member State.
The English courts have, in certain circumstances, jurisdiction to make a winding-up order in respect of an
insolvent foreign company that does not have its COMI in the European Union (so that the Regulation does not
apply). For example, the English courts may make a winding-up order in respect of an insolvent “unregistered
company” being a company not incorporated in England and Wales, pursuant to Part V of the Insolvency Act.
The English High Court has identified three core requirements that must be fulfilled in order for the English
courts to make a winding-up order in respect of an unregistered company, namely that (i) there must be
sufficient connection with England and Wales which may, but does not necessarily have to, consist of assets
within England and Wales; (ii) there must be a reasonable possibility, if a winding-up order is made, of benefit
to those applying for the order; and (iii) one or more persons interested in the distribution of assets of the
company in question must be persons over whom the courts can exercise jurisdiction. In addition, the law in
England and Wales is unclear as to whether an administrative receiver may be appointed to a company that is
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