Re Hellas Telecommunications (Luxemburg) II SCA

A company incorporated as a Luxembourg Société en Commandite par Actions, possessing separate legal personality, constitution and shareholders, falls within the meaning of “company” for the purposes of Schedule B1 to the Insolvency Act 1986. The presumption that a company’s centre of main interests is in its state of incorporation may be rebutted by clear, objective and ascertainable facts. The court assesses COMI at the date of the application and may recognise a shift to England. In a pre-pack administration, the merits are generally for the administrator and creditors. The court may intervene where the sale is plainly abusive or plainly the only realistic course, but making an administration order does not ordinarily endorse the sale.

The company and its directors applied for an administration order on the grounds that the company was unable to pay its debts and that administration would produce a better result for creditors than winding up.

The company was incorporated in Luxembourg but operated as a financing and shareholding vehicle. The application raised two jurisdictional questions: whether the entity was a “company” for the purposes of Schedule B1 to the Insolvency Act 1986, and whether its centre of main interests had moved from Luxembourg to England.

The court also considered the proposed pre-pack sale of the company’s principal asset to a group company, including the appropriate extent of judicial scrutiny.

1. The court had jurisdiction to make an administration order. A Société en Commandite par Actions with separate legal personality, a constitution and shareholders was a company for the purposes of Schedule B1 to the Insolvency Act 1986.
2. The incorporation presumption under the EC regulation was rebutted. COMI is assessed at the date of the application and may move from the place of incorporation. The relevant evidence included the company’s head office and principal operating address in London, notification to creditors, the London bank account, registration under the Companies Act and the fact that negotiations with creditors took place in London. These were clear, objective and ascertainable facts demonstrating that COMI had moved to England.
3. The company was insolvent, and administration would produce a better result for creditors than winding up. The only bid capable of obtaining the consent of the senior creditors was the proposed pre-pack sale to Weather.
4. The merits of a pre-pack sale generally fall to be dealt with by the administrator. Creditors may challenge the administrator’s decision during the administration. The court may refuse an administration order or direct that a sale not proceed where the evidence makes clear that the sale would be an abuse of the administrators’ powers. Conversely, where the sale is plainly the only realistic way forward, the court may give liberty to proceed.
5. In the ordinary case, an administration order made in the context of a pre-pack should not be understood as the court’s approval of the sale. The guidance in Re Kayley Vending Limited [2009] BCC 578, that relevant information should be provided to the court, was complied with. The administration order was made and the administrators were expressly given liberty to enter into the pre-pack sale.

First instance decision. No prior appellate decision is stated in the judgment.