HSBC Bank v Tambrook Jersey Ltd

Section 426 of the Insolvency Act 1986 permits an English court to assist a foreign insolvency court in relation to insolvency activity undertaken, or intended to be undertaken, by that court. It does not authorise the English court to provide insolvency proceedings merely because the foreign court requests them, where no foreign insolvency process exists or is contemplated. In that situation, the proposed English proceedings are a substitute for, rather than assistance to, the foreign court’s process. The jurisdictional threshold is therefore not met.

HSBC Bank, a secured creditor of a Jersey company whose principal business activity and assets were in England, sought the appointment of English administrators. The application was supported by a letter of request from the Royal Court of Jersey under section 426 of the Insolvency Act 1986. No Jersey insolvency proceedings were in existence or intended, because the parties considered the Jersey Désastre procedure unsuitable. The central issue was whether appointing English administrators in those circumstances constituted assistance within section 426(4).

The application was refused.

1. Section 426(4) and (5) contemplate cooperation between courts exercising corresponding insolvency jurisdictions. A request from a foreign insolvency court is not, by itself, authority to make any order that the foreign court considers desirable.

2. The foreign court must be doing, or apparently intending to do, something in its insolvency jurisdiction which the English court is invited to assist. This reflects the modified-universalism context of section 426, discussed in In re HIH Casualty and General Insurance Ltd [2008] UKHL 21 and Rubin v Eurofinance SA [2013] 1 AC 236.

3. Here, the Royal Court of Jersey was not conducting, and did not intend to commence, insolvency proceedings. The requested administration was therefore not assistance to a Jersey process. It was a substitute for one. The fact that creditors and the Jersey commercial community might benefit could not satisfy the statutory requirement.

4. Earlier Jersey requests and corresponding English administration orders did not determine the issue. The reported decisions contained no reasoned consideration of the jurisdictional point, and it was unclear whether the relevant factual circumstance had been drawn to the earlier judges’ attention.

The letter of request was entitled to respect, but the statutory threshold was not crossed. The application for an administration order was refused.

Not stated in the judgment.