Trillium (Nelson) Properties Ltd v Office Metro Ltd

For secondary insolvency proceedings, an establishment must exist in the relevant jurisdiction when the proceedings are opened. A historical establishment connected with the transaction creating the debt is insufficient.

The establishment must comprise a place of operations where the debtor conducts external economic activity, using human means and assets, on a non-transitory basis. A registered office, bank accounts, guarantee liabilities, occasional payments, professional advice, post forwarding and formal compliance work do not necessarily satisfy that test. The assessment is realistic and commercial, rather than a technical or purely third-party-perception exercise.

The petitioner sought the winding-up of an English registered company which had moved its centre of main interests to Luxembourg and was already subject to Luxembourg insolvency proceedings. The petition debt arose from rent payable under a guarantee relating to English property.

The petition was amended so that any English winding-up would be secondary proceedings under the EC Regulation on Insolvency Proceedings. The central issues were the relevant date for determining whether the company had an establishment in England, whether its residual English activities constituted an establishment, and whether secondary proceedings would serve any useful purpose.

1. Relevant date. The relevant date for determining whether an establishment existed was the date on which the winding-up petition was presented. Article 3 contemplated a single point in time when jurisdiction was invoked. It did not permit the court to look back to the date of the transaction giving rise to the petition debt. The contrary authorities relied upon were unclear or insufficiently reported and, insofar as they supported a historical-establishment test, were wrong.
2. Meaning of establishment. Article 2(h) required a place of operations where the debtor carried out non-transitory economic activity with human means and goods. The concept had to be interpreted realistically in its commercial context. It required activity external to the company and a location from which that activity was conducted.
3. Human means and assets. Human means need not consist of the debtor’s own employees. Employees of group companies and independent contractors could qualify. “Goods” could properly be understood more broadly as assets, including money and land.
4. Application. The Chertsey office was the only possible place of operations. Group personnel and a service company dealt there with some matters for the company, and the company maintained English bank accounts and a registered office. Those matters did not amount to economic activity on the market. Being liable under guarantees, occasionally paying them, obtaining legal or accounting advice, forwarding post and dealing with formal filings did not suffice.
5. The residual activities were in any event transitory. They were intermittent, contingent and lacked the character of a consistent business or business-type activity. The company therefore had no establishment in England at the relevant date, and the petition had to be dismissed.
6. The court also expressed the view, obiter, that secondary proceedings would probably have served no real useful purpose. The suggested advantages concerning preferences, transactions at an undervalue, wrongful trading and the Luxembourg liquidator’s responsiveness were not sufficiently established.