Home Insurance Company, Re

The court may sanction an English scheme of arrangement even while related proceedings concerning the arrangement remain pending in a foreign court. The doctrine of comity does not require the English court to defer where each court is addressing distinct questions under its own law. The possibility that the foreign court may later reject the arrangement does not necessarily justify adjournment. The court should assess the likely expenditure, the interests of creditors, the views of the liquidators and the practical consequences of delay. A party whose objection may advance its own financial interests should have that motivation borne in mind, although its submissions must still be considered on their merits.

The Home Insurance Company, a New Hampshire corporation, was subject to liquidation proceedings in New Hampshire and ancillary provisional liquidation proceedings in England. A scheme under section 425 of the Companies Act 1985 was proposed to enable claims against reinsurers to be pursued and the recoveries divided between subordinated claimants and the general body of creditors.

The scheme had been unanimously approved by the relevant creditors and had received approval in principle from the New Hampshire Superior Court. Appeals were pending in the New Hampshire Supreme Court, creating uncertainty whether the necessary New Hampshire approval remained effective. The ACE Companies sought adjournment rather than immediate sanction, relying on comity, possible confusion between the courts and the risk of wasted expenditure.

1. Scheme sanctioned. The procedural requirements had been fulfilled and, subject to the objections, the scheme was one which the court should sanction.
2. Comity. The New Hampshire courts were considering the lawfulness of the overall arrangement under New Hampshire law, whereas this court was considering the scheme under English law. The two jurisdictions might address interdependent matters, but there was no relevant overlap or conflict engaging comity. The pending New Hampshire proceedings therefore provided no basis for refusing or postponing sanction.
3. The possibility that sanction might create confusion or cause the New Hampshire court to give unwarranted weight to the English decision was rejected. The courts had different functions, and the New Hampshire court could distinguish the issues properly. The company could properly inform the New Hampshire court of the English outcome without relying on it as establishing the arrangement’s benefit or creating an estoppel.
4. Potential wasted expenditure. The court could not reliably quantify future expenditure, but considered it unlikely to be great. Significant weight was given to the liquidators’ assessment that continuing the work was in creditors’ interests. Support from creditors, including a substantial non-AFIA creditor, also supported continuation, though the court treated the creditors’ letters with appropriate caution.
5. Further delay could itself prejudice the estate, and work undertaken before the New Hampshire appeal was resolved might still produce recoveries for creditors even if the overall arrangement later failed. If the ACE Companies believed that the liquidators were wasting money, a direct application concerning the liquidators would be the more appropriate remedy.
6. Applying the principles identified in British Aviation Insurance Co Ltd [2005] EWHC 1621, the court sanctioned the scheme while expressly avoiding any trespass upon matters falling within the New Hampshire Supreme Court’s jurisdiction.

First-instance decision. No appellate history was stated in the judgment.