Samsun Logix Corporation v Def

Where the requirements in article 17(1) of the Cross-Border Insolvency Regulations 2006 are established, and the public policy exception does not apply, the court must recognise the foreign proceeding. Recognition as a foreign main proceeding triggers the consequences specified in article 20, including an immediate stay having the same effect as a stay following a winding-up order. The court may also grant discretionary relief under article 21 where necessary to protect the debtor’s assets or creditors’ interests. That relief may include protection similar to the administration moratorium under paragraph 43 of Schedule B1 to the Insolvency Act 1986.

A court-appointed receiver and foreign representative applied under the Cross-Border Insolvency Regulations 2006 for recognition of Korean insolvency proceedings concerning Samsun, a Korean company. The court considered recognition under article 17, classification as a foreign main or non-main proceeding, the automatic consequences under article 20, and discretionary relief under article 21. The application also concerned the effect of recognition on a London arbitration due to commence the following day.

1. The requirements for recognition under article 17(1) of the Cross-Border Insolvency Regulations 2006 were satisfied. No issue arose under the public policy exception in article 6. The Korean proceedings were therefore recognised.
2. The proceedings were recognised as a foreign main proceeding. Recognition in that capacity engaged article 20 and its specified stays or suspensions.
3. In particular, the pending London arbitration against Samsun was immediately stayed. Under article 20(2), that stay had the same effect as a stay resulting from a winding-up order under the Insolvency Act 1986.
4. Relief under article 21 is discretionary and may be granted where necessary to protect the debtor’s assets or the interests of creditors. The relief sought was appropriate in the circumstances.
5. The court granted relief under article 21(1)(g) of a character similar to the moratorium relief available under paragraph 43 of Schedule B1 to the Insolvency Act 1986. An order recognising the Korean proceedings and granting the specified relief was made.