Dap Holding NV

The court has jurisdiction to sanction a scheme of arrangement under Companies Act 1985, ss.425 and 426, where the scheme company is a foreign corporation without its centre of main interests or an establishment in England and Wales, provided it falls within the statutory concept of a company liable to be wound up. Territorial and other judge-made conditions concern the discretionary exercise of jurisdiction, rather than its existence. The absence of insolvency, or of a centre of main interests or establishment in England and Wales, does not prevent that statutory liability. European insolvency legislation does not alter the position where it does not apply, and the insurers’ regulations preserve the relevant statutory treatment for EEA insurers. The Brussels jurisdiction and judgments regulation does not apply to schemes of arrangement because judicial arrangements and analogous proceedings are expressly excluded.

The court considered 18 schemes of arrangement under Companies Act 1985, s.425. One scheme concerned DAP Holding NV, a Dutch reinsurer; the other 17 concerned Dutch insurers. None of the companies had its centre of main interests or an establishment in England and Wales.

The statutory voting and fairness requirements had been satisfied. The central issue was whether the court had jurisdiction to sanction the schemes despite the companies’ foreign incorporation and lack of territorial connection of that kind.

The court sanctioned all 18 schemes.

1. Under Companies Act 1985, s.425(6)(a), “company” means a company liable to be wound up under that Act. By s.735A, the relevant provisions include parts of the Insolvency Act 1986. Section 221(1) of that Act permits any unregistered company to be wound up, subject to the statutory provisions. The words used do not restrict the court’s theoretical territorial jurisdiction over a foreign corporation.

2. Following Re Drax Holdings Ltd [2004] 1 W.L.R. 1049, the judge-made conditions developed in earlier winding-up cases concern the discretionary exercise of the power, not the existence of the power. A sufficient connection with England and Wales remains necessary before the court exercises its jurisdiction, but the absence of a centre of main interests or establishment in England and Wales does not itself remove jurisdiction.

3. The Regulation on Insolvency Proceedings 1346/2000 did not apply to the 17 insurance undertakings. It potentially applied to DAP Holding NV, but Articles 3(1) and 3(2) did not prevent the statutory conclusion that it was liable to be wound up. The relevant territorial matters were transient and did not determine the existence of the statutory jurisdiction.

4. For the 17 EEA insurers, reg.5 of the Insurers (Reorganisation and Winding Up) Regulations 2004 treated each insurer as a company liable to be wound up under the 1986 Act if it would otherwise have been so liable, notwithstanding the prohibition in reg.4. They were therefore prima facie within s.425(6)(a).

5. Article 1(2)(b) of Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters expressly excluded bankruptcy proceedings, judicial arrangements, compositions and analogous proceedings. A scheme under ss.425 and 426 therefore fell outside that Regulation.

6. The conclusion was consistent with Re La Mutuelles du Mans Assurances IARD [2005] EWHC 1599 (Ch); [2006] B.C.C. 11. The court was satisfied both that it had jurisdiction and that it should exercise it.