Technical bulletin - Common sense prevails.pdf - Zolfo Cooper

Common sense prevails as
UK appeal court decision
reaffirms cross-border
co-operation: Zolfo Cooper
appointed administrators over
Tambrook Jersey Limited
Advisory & Restructuring

The situation
Tambrook Jersey Limited (the Company) is a Jersey-registered
property development company (comprising a mixed social and
private residential development complex based in Margate, Kent).
A firm of quantity surveyors assessed the costs required to complete
the development on behalf of the Bank and concluded that the ‘build
out’ option was not viable.
A social housing group had already invested approximately £3 million
into the development and agreed to buy the Company’s interest in
the property via an administration process. This sale had the support
of the Bank and the director.
Proposed course of action
The decision was therefore taken to pursue an English administration
of the Jersey registered company using s426 of the Insolvency Act
1986 on the basis that this would achieve the desired outcome and
deal with the corporate entity. An application seeking a Letter of
Request from the Jersey Royal Court was therefore made and duly
granted in late February 2013. Upon receipt of this, an application by
way of representation supported by affidavit was made to the English
High Court by the Bank with input and support from Zolfo Cooper.
Outcome of the initial High Court hearing
In summary, the Court concluded that it was unable to make the
requisite order appointing an administrator as:
• The English court was not in a position to ‘assist’ a foreign
insolvency court unless insolvency proceedings had already been
commenced or had been initiated in the foreign court.
• The judge explicitly stated that ‘s426 does not exist to fill in gaps
in another jurisdiction’s insolvency processes… it exists to improve
cooperation between actual processes’.
• Lastly he concluded that the fact that creditors might benefit from
the requested assistance was irrelevant to the decision to grant
the administration order.
The Court’s decision was contrary to several previous cases, which
provided precedent that Jersey companies could be placed into
English administration via the s426 Letter of Request route.
The decision would have had significant implications for Jersey and
other offshore companies that cannot shift their COMI to England,
reducing the number of insolvency options to stakeholders of such
companies.
Court of Appeal process
The Bank, in conjunction with Zolfo Cooper and appointed legal
advisers CMS Cameron McKenna, took the decision to appeal this case.
Following an appeal hearing on 1 May 2013, the Court of Appeal
reversed the High Court’s original decision and granted the
administration order, appointing Nick Cropper, Peter Holder and Anne
O’Keefe of Zolfo Cooper as administrators of the Company.
Immediately following the appointment, a sale of the business and
assets was concluded to the social housing group.
“We are pleased that common sense has prevailed and
that the uncertainty surrounding this case has been
removed. The overriding principles of cross border
co-operation have been restored.”
Nick Cropper, Partner, Zolfo Cooper
This case further strengthens our credentials in the real estate/
construction sector. We have worked with a number of construction
and real estate clients in the UK, including major banks and other
financial institutions. Our in-house expertise means we can assist all
types of stakeholders to explore the options available in order to find
innovative and commercial solutions.
Contact
To learn more about our services in the real estate and construction
sector please contact Nick Cropper, Anthony Legg or your local Zolfo
Cooper contact:
Nick Cropper
t: +44 (0) 20 7332 5080
e: ncropper@zolfocooper.eu
Anthony Legg
t: +44 (0) 20 7332 5126
e: alegg@zolfocooper.eu
Zolfo Cooper
10 Fleet Place, London EC4M 7RB
t: +44 (0) 20 7332 5000 f: +44 (0) 20 7332 5001
Follow our Twitter feed: @ZolfoCooperLLP
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www.zolfocooper.com