Swissair, Re

The court has an inherent power to direct an ancillary English liquidator to remit assets to a foreign liquidation where the foreign law provides for pari passu distribution among unsecured creditors. That power is independent of Insolvency Act 1986, section 426. The speeches in Re HIH Casualty and General Insurance Ltd did not displace or question that established principle. Remittal may also be ordered under article 21.2 of the Cross-Border Insolvency Regulations 2006, provided that creditors’ interests are adequately protected and the relief is consistent with any concurrent English insolvency proceeding.

Swissair, a Swiss company with an English branch, was subject to parallel insolvency proceedings in Switzerland and England. The English liquidation was intended to be ancillary to the Swiss proceedings, and a protocol provided for their co-ordination.

The English liquidators sought directions to remit realised English assets, after expenses and a preferential claim, to the Swiss liquidator. The Swiss liquidation would distribute the remitted assets pari passu among general creditors. Switzerland was not a relevant country for the purposes of section 426 of the Insolvency Act 1986. The central issue was whether remittal remained available under the court’s inherent jurisdiction and under the Cross-Border Insolvency Regulations 2006.

1. The order for remittal was made under both the court’s general power to give directions to liquidators and article 21.2 of the Cross-Border Insolvency Regulations 2006.

2. The long-established authorities, beginning with Re Matheson Bros Ltd and culminating in Re BCCI (No 10), establish a power to remit assets from an ancillary English liquidation to a foreign liquidation for pari passu distribution. That jurisdiction is independent of section 426 of the Insolvency Act 1986.

3. The divided reasoning in Re HIH Casualty and General Insurance Ltd concerned remittal where the foreign distribution would not be pari passu. The speeches of Lord Scott and Lord Neuberger did not reject the established power to remit assets where the foreign liquidation would distribute pari passu. The court therefore declined to treat Re HIH Casualty and General Insurance Ltd as calling that principle into question.

4. Under article 21.2, the court must be satisfied that the interests of creditors in Great Britain are adequately protected. That requirement was met because of the evidence concerning Swiss law and the protocol, including review of rejected proofs and preservation of English set-off rights.

5. Article 29(a)(i) requires relief to be consistent with a concurrent British insolvency proceeding. The court did not need to define the precise scope of that qualification, but the proposed remittal was unquestionably consistent with the English liquidation.

6. Article 21.3 imposes an additional restriction for remittal to a foreign non-main proceeding, but contains no equivalent restriction for a foreign main proceeding. Remittal to a recognised foreign main proceeding is therefore contemplated by the Regulations.