Re Seat Pagine Gialle SpA

The court permitted the convening of creditor meetings to consider a proposed scheme of arrangement under section 895 of the Companies Act 2006, concluding that a foreign holding company can be "a company liable to be wound up under the Insolvency Act 1986" for the purposes of that provision even where its centre of main interests is outside the United Kingdom. The court held there was a sufficient connection with England because the liabilities in question were governed by English law and the financing documentation contained an exclusive English jurisdiction clause, and it followed prior authorities (including re Drax, re DAP Holdings and re Rodenstock/Radenstock) on that issue.

The court also considered the effect of the Judgments Regulation (in particular Article 23) and concluded it did not deprive the English court of jurisdiction in the circumstances. The existence of lock-up or consent fee arrangements payable to consenting creditors did not, on the facts, require those creditors to be treated as a separate class; that is a fact-specific enquiry to be revisited at the sanction hearing if evidence shows the arrangements materially distorted voting.

Separately, the court granted an administration order under Schedule B1 to the Insolvency Act 1986 for Lighthouse International Company SA after finding that the companys centre of main interests had been established in England and that the statutory purposes for administration were met.

Background and parties: The primary application sought directions to convene meetings of three classes of creditors to consider a scheme of arrangement proposed by Seat Pagine Gialle SPA (an Italian incorporated group holding company) and, if approved, for the company to apply for court sanction. The creditors were providers of indemnities under English-law financing documentation. Separately, Lighthouse International Company SA (Luxembourg incorporated) applied for appointment of administrators under Schedule B1 to the Insolvency Act 1986.

Nature of relief sought: (i) an order to convene creditor meetings and approve scheme documents so that a scheme of arrangement could be voted upon and, if approved, brought for sanction; (ii) an administration order for Lighthouse International Company SA.

Issues framed: Whether the English court had jurisdiction to sanction a scheme affecting a foreign company (issues under section 895 Companies Act 2006 and the EC Insolvency Regulation/COMI rules); whether the Judgments Regulation (including Article 23 on exclusive jurisdiction clauses and Article 2) deprived the English court of jurisdiction; whether lock-up/consent fee arrangements required separate class constitution for consenting creditors; whether the court could make an administration order for Lighthouse, in particular whether its centre of main interests (COMI) was in England and whether the statutory purposes for administration were satisfied.

Reasoning and decision: On the scheme application the judge followed prior authorities and concluded that a foreign company may nevertheless be a "company liable to be wound up" for section 895 purposes even if its COMI is not in the United Kingdom; the English law governing the relevant liabilities and an exclusive jurisdiction clause gave a sufficient connection to justify promotion of the scheme in England. The judge accepted the reasoning in earlier authorities (re Drax, re DAP Holdings, re Radenstock/Rodenstock and re Primacom) on both the section 895 point and the effect of the Judgments Regulation; Article 23 did not deprive the court of jurisdiction. On lock-up/consent fees, the judge held that the arrangements did not, on the facts, establish a separate class of creditors because the benefit was available to all and the sum was small; however he left open that a different factual showing might affect class composition or the exercise of discretion at sanction. On the administration application, the judge concluded that the COMI of Lighthouse had been transferred to England and that the company was insolvent and that an administration would meet statutory purposes, so the administration order was made.

Wider context: The judgment follows and applies recent authorities on cross-border insolvency, COMI and the interplay between EC Insolvency Regulation / Judgments Regulation and English company rescue procedures, and confirms the court will scrutinise lock-up arrangements at sanction if evidence suggests they distort creditor classes or voting.

The court ordered that meetings of the relevant creditor classes be convened and approved the scheme documentation, holding that the company fell within section 895 Companies Act 2006 and that there was a sufficient connection with England (English governing law and an exclusive jurisdiction clause). The court also held that the Judgments Regulation did not deprive the court of jurisdiction on the facts and that the lock-up/consent fee arrangements did not, on the evidence, require separate creditor classes. Separately, the court made an administration order under Schedule B1 Insolvency Act 1986 for Lighthouse International Company SA after finding its COMI to be in England and that administration met the statutory purposes.