Akers & Anor v Deutsche Bank AG

Following recognition of foreign insolvency proceedings, a foreign representative may seek both the minimum relief available under Article 21(1)(d) of the UNCITRAL Model Law and additional relief available to a British insolvency officeholder under Article 21(1)(g). That additional relief may include an order under section 236 of the Insolvency Act 1986.

The court must balance the officeholder’s reasonable requirements against the burden imposed on the person required to produce documents. Section 236 is not confined to documents needed to reconstitute the company’s knowledge, and may support investigation into whether valuable claims or causes of action exist. Relief may be granted despite inconvenience, expense, a non-officeholder respondent or contemplated litigation, provided the order is reasonable and necessary to protect the debtor’s assets or creditors’ interests.

The joint liquidators of two British Virgin Islands companies, whose appointments had been recognised in England under the Cross-Border Insolvency Regulations 2006, applied for Deutsche Bank AG to produce documents concerning credit-linked note and credit default swap transactions.

The transactions had resulted in substantial losses after a credit event involving Kaupthing. The liquidators sought documents concerning the transactions, related credit default transactions, possible conflicts of interest, client categorisation and advice. Deutsche Bank disputed the scope of the proposed relief and sought conditions concerning compliance costs and confidentiality.

The central issues were whether Article 21(1)(g) permitted reliance on section 236 of the Insolvency Act 1986, whether the statutory and Model Law thresholds were met, and what conditions should govern the order.

1. The applications were granted, subject to amendments to the draft orders and the provision of confidentiality undertakings.

2. Article 21(1)(d) establishes a common minimum standard for the provision of information. Article 21(1)(g) permits a foreign representative to seek additional relief available under British insolvency law. Accordingly, the liquidators could rely on section 236 of the Insolvency Act 1986, whether or not Article 21(1)(d) itself was wide enough to provide equivalent relief.

3. The requirement in Article 21(1) that relief be necessary to protect the debtor’s assets or the creditors’ interests did not materially restrict the availability of section 236 relief in this case. Where a foreign representative reasonably requires material to investigate whether the company has a valuable cause of action, relief is likely to satisfy that requirement.

4. Section 236 involves a careful balancing exercise. The court must weigh the officeholder’s reasonable requirements in carrying out his functions against the need to avoid an order that is wholly unreasonable, unnecessary or oppressive. The power is not limited to documents required to reconstitute the company’s state of knowledge. It can extend to internal documents, documents held by a person who is not an officer or employee, and material sought to investigate possible litigation or a wider scheme. Within reasonable limits, investigation may properly involve what might be described as fishing.

5. The disputed categories of documents were sufficiently connected with the liquidators’ investigation and would not impose an unreasonable burden on Deutsche Bank. The disclosure period and descriptions of certain transactions, conflicts and advice were narrowed to improve precision. The order also permitted appropriate redactions and included liberty to apply.

6. Costs of compliance were to be addressed after the order had been complied with. Express confidentiality undertakings were appropriate, particularly given the professional links between the liquidators’ advisers and Kaupthing, although any restrictions remained subject to variation or discharge on ordinary principles.

This was a first-instance decision of the High Court (Chancery Division). The judgment does not state any subsequent appellate history.