Mount Capital Fund Ltd ((in Liquidation)) and Others v Companies Act

• Jurisdiction: Ireland
• Court: High Court
• Judge: Miss Justice Laffoy
• Judgment Date: 05 March 2012
• Neutral Citation: [2012] IEHC 97
• Date: 05 March 2012
• Docket Number: [2012 No. 70 MCA]

[2012] IEHC 97

THE HIGH COURT

[No. 70 MCA/2012]

Mount Capital Fund Ltd (In Liquidation) & Ors, In re

IN THE MATTER OF AN APPLICATION BY MOUNT CAPITAL FUND LIMITED (IN LIQUIDATION)

AND

IN THE MATTER OF AN APPLICATION BY MOUNT CAPITAL ASSET SUBSIDIARY LIMITED (IN LIQUIDATION)

AND

IN THE MATTER OF AN APPLICATION BY JOHN GREENWOOD AND HADLEY J. CHILTON, JOINT OFFICIAL LIQUIDATORS OF MOUNT CAPITAL FUND LIMITED (IN LIQUIDATION) AND MOUNT CAPITAL ASSET SUBSIDIARY LIMITED (IN LIQUIDATION)

COMPANIES ACT 1963 S245

INSOLVENCY ACT 2003 PART VI (BRITISH VIRGIN ISLANDS)

INSOLVENCY ACT 2003 S284 (BRITISH VIRGIN ISLANDS)

INSOLVENCY ACT 2003 S285 (BRITISH VIRGIN ISLANDS)

BRITISH & COMMONWEALTH HOLDINGS PLC (JOINT ADMINISTRATORS) v SPICER & OPPENHEIM 1993 AC 426 1992 3 WLR 853 1992 4 AER 876 1992 BCC 977 1993 BCLC 168

CAMBRIDGE GAS TRANSPORTATION CORP v OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF NAVIGATOR HOLDINGS PLC & ORS 2007 1 AC 508 2006 3 WLR 689 2006 3 AER 829

LINES BROS LTD (IN LIQUIDATION), IN RE 1983 CH 1 1982 2 WLR 1010 1982 2 AER 183

PHOENIX KAPITALDIENST GMBH, IN RE; SCHMITT v DEICHMANN 2012 2 AER 1217 2012 BCC 561 2012 ILPR 18 2012 EWHC 62 (CH)

EEC REG 1346/2000

INSOLVENCY ACT 1986 S423 (UK)

DRUMM (A BANKRUPT), IN RE UNREP DUNNE 13.12.2010 (EX TEMPORE)

UNITED STATES CODE TITLE 11 CHAP 7

FAIRFIELD SENTRY LTD (IN LIQUIDATION) & KRYS v CITCO BANK NEDERLAND NV & ORS UNREP FINLAY GEOGHEGAN 28.2.2012 2012 IEHC 81

COMPANIES ACT 1963 PART XI

EEC REG 44/2001 ART 34

FLIGHTLEASE (IRL) LTD (IN VOLUNTARY LIQUIDATION), IN RE UNREP SUPREME 23.2.2012 2012 IESC 12

COMPANIES ACT 1963 S280

RUBIN & ANOR v EUROFINANCE & ORS SA 2011 CH 133 2011 2 WLR 121 2011 BUS LR 84 2011 1 AER (COMM) 287

HIH CASUALTY & GENERAL INSURANCE LTD, IN RE 2008 1 WLR 852 2008 BUS LR 905 2008 3 AER 869 2008 BCC 349

INSOLVENCY ACT 1986 S426 (UK)

CROSS-BORDER INSOLVENCY REGS 2006 SI 1030/2006 (UK)

COMPANIES ACT 1963 S250(1)

MACCANN & ORS COMPANIES ACTS 1963-2009 2010 510

BOLTON'S ESTATE, IN RE 1920 2 IR 324

COMPANY LAW

Liquidation

Recognition of foreign liquidation - Equivalence of laws - Jurisdiction - Common law - Whether court had jurisdiction to recognise foreign liquidation - Whether court had jurisdiction to order court and court officers to act in aid and auxiliary to foreign liquidators - Whether relief sought for legitimate purpose - Whether relief in the nature of enforcement - Fairfield Sentry Ltd (in liq) v Citco Bank Nederland NV [2012] IEHC 81, (Unrep, Finlay Geoghegan J, 28/2/2012) approved; Cambridge Gas Transport Corp v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26, [2007] 1 AC 508, Schmitt v Deichmann [2012] EWHC 62 (Ch.), [2012] 2 All ER 1217, In re Lines Bros Ltd [1983] 1 Ch 1, Rubin v Eurofinance SA [2010] EWCA Civ 895, [2011] Ch 133, and In re HIH Casualty and General Insurance Ltd; McMahon v McGrath [2008] UKHL 21, [2008] 1 WLR 852 considered ; In re Flightlease (Ireland) Ltd (in vol liq) [2012] IESC 12, (Unrep, SC, 23/2/2012) distinguished; In re Bolton [1920] 2 IR 324 considered - Companies Act 1963 (No 33), ss 245 and 250 - Recognition granted (2012/70MCA - Laffoy J - 5/3/2012) [2012] IEHC 97

Re Mount Capital Fund Ltd

Facts An application was brought (on an ex parte basis) on behalf of liquidators appointed in the British Virgin Islands seeking the discovery of certain documents and seeking assistance regarding the recovery of assets in relation to certain companies. It was contended that replies furnished to the liquidators from companies based in Ireland (principally auditors) were inadequate and the liquidators sought relief under the Companies Act, 1963 to compel the auditors to release documents. One of the auditors (Deloitte) had indicated that the documents they held were "working papers" and did not intend to disclose these unless ordered to by a court. In addition the liquidators sought access to meet named employees. On behalf of the liquidators it was contended that the relevant legislation in the British Virgin Islands demonstrated an equivalence of approach as regards the winding up of companies as set out in 1963 Act (in particular S.245). At issue also was the extent to which insolvency/bankruptcy proceedings in one jurisdiction had effect in other jurisdictions.

Held by Laffoy J in making the following order: The liquidators had shown a prima facie case for the conclusion of equivalence between s. 245 of the Act of 1963 and the corresponding provisions of the British Virgin Islands legislation. The court was satisfied that it had an inherent jurisdiction to give recognition to insolvency proceedings in jurisdictions outside the European Union. Relief in the nature of enforcement, as distinct from recognition, was not being sought and would not be appropriate in an ex parte application. Recognition was being sought for a legitimate purpose and an equivalence of legislation had been demonstrated. The court would formally recognise the relevant orders made by the courts of the British Virgin Islands and give the liquidators liberty to apply for orders under s. 245 of the 1963 Act and such further relief as might be appropriate. Any party against whom relief was sought would be at liberty to challenge the making of any such order.

1 Judgment of Miss Justice Laffoy delivered on 5th day of March, 2012.

1. The application

2 2 1.1 The application to which this judgment relates was made ex parte on behalf of Hadley J. Chilton and John J. Greenwood (the Liquidators) of Mount Capital Fund Limited and Mount Capital Asset Subsidiary Limited (the Companies). The Liquidators were appointed joint liquidators of each of the Companies by orders of the Eastern Caribbean Supreme Court in the High Court of Justice of the British Virgin Islands on 22 ^nd September, 2009. By orders made on 26 ^th January, 2012 in the High Court of Justice Virgin Islands Commercial Division in relation to each of the Companies, it was ordered that the Liquidators, in their capacity as joint liquidators, should have leave to apply to the High Court of Ireland for recognition of the liquidation of each of the Companies.

3 3 1.2 In the ex parte docket which initiated the application it was recited that the Liquidators desire the aid of this Court for the purpose of recovering or getting in:

4 (i) all of the Books and Records relating to the Companies, and

5 (ii) all of the assets and property of the Companies,

6 (in each case) within the jurisdiction of this Court and/or within the possession, power or procurement of any person within the jurisdiction of this Court, and for such other lawful purposes from time to time. The specific relief sought in the ex parte docket is as follows:

7 (a) that this Court recognise the Liquidation Orders made on 22 ^nd September, 2009; and

8 (b) that this Court and the officers of this Court act in aid and be auxiliary to the Eastern Caribbean Supreme Court in the High Court of Justice in the British Virgin Islands and in particular assist and act in aid of the said Court in the following matters:-

9 (i) authorising the Liquidators to exercise in relation to the Companies and each of them the powers afforded to an official liquidator under s. 245 of the Companies Act 1963 (the Act of 1963);

10 (ii) granting to the Liquidators liberty to apply for such orders under s. 245 of the Act of 1963 in relation to the Companies and each of them;

11 (iii) giving the Liquidators liberty to apply for such further and other reliefs as shall appear appropriate to them in exercise of their functions as Liquidators of the Companies and which the Court shall see fit to grant.

2. The factual basis of the application

12 2 2.1 The application is grounded on the affidavit of Hadley J. Chilton, one of the Liquidators, who has outlined therein, in broad terms, the circumstances which led to the liquidation of the Companies, the course of the liquidation and the current financial status of the Companies which is that "the scale of financial loss that the Companies have encountered is in excess of USD200 million". Mr. Chilton has also averred as to the purpose of this application, again in broad terms, as -

"... to give the Liquidators standing to seek, in a subsequent application or applications, certain Orders on an inter partes basis in the High Court of Ireland in order to obtain certain documentation which ought to be comprised within the books and records of the Companies but which documents are not at present available to the Liquidators, and other information concerning the business and affairs of the Companies."

13 3 2.2 The identity of the entities against whom it is intended to bring applications under s. 245 of the Act of 1963, if the recognition sought is granted by the Court, is clear from the affidavit of Mr. Chilton. They are:

14 (a) PricewaterhouseCoopers (PwC);

15 (b) Deloitte & Touche LLP Ireland (Deloitte): and

16 (c) Citi Hedge Fund Services (Ireland) Ltd. (Citi).

17 4 2.3 Mr. Chilton has averred that there is no local "auditor sign off" requirements in the British Virgin Islands. The Companies selected PwC in Ireland as the Companies' auditors for the financial years ended 31 ^st December, 2002, 31 ^st December, 2003, 31 ^st December, 2004 and 31 ^st December, 2005. PwC was involved in the preparation of the Companies' financial statements dated 25 ^th June, 2003, 2 ^nd September, 2004, 7 ^th June, 2005 and 24 ^th May, 2006. Deloitte was the Companies' auditor for the financial years ending 31 ^st December, 2006 and 31 ^st December, 2007. Deloitte was involved in the preparation of the Companies' financial statements dated 27 ^th June, 2007 and 19 ^th May, 2008. Mr. Chilton has outlined the requests made by the Liquidators to both PwC and Deloitte for documentation (whether in electronic or...