Leite v Amicorp (UK) Ltd

Foreign insolvency proceedings may be recognised under the Cross-Border Insolvency Regulations 2006 even where they concern connected companies and may ultimately pool assets for the benefit of creditors of another company. Interim proceedings can qualify where they arise under insolvency law, serve a liquidation or reorganisation purpose, and place the debtor’s assets and affairs under foreign-court control or supervision. A court-appointed provisional administrator may therefore be a foreign representative. Upon recognition, relief may include disclosure equivalent to that available under section 236 of the Insolvency Act 1986, subject to a careful assessment of reasonable necessity and oppression.

Dr Leite was the judicial administrator of Industria de Alimentos Nilza SA and had been appointed provisionally as administrator of Buglin Participacoes Ltda and Endipa Comércio e Administração Ltda in Brazilian proceedings seeking to extend Nilza’s bankruptcy to connected entities. He applied for recognition of those proceedings under the Cross-Border Insolvency Regulations 2006 and for disclosure from Amicorp (UK) Ltd of documents concerning the companies and Tipuana Investments LLP. Nilza’s proceedings had previously been recognised in England. Amicorp did not attend or oppose the applications. The central issues were whether the Brazilian extension proceedings were collective foreign main proceedings and whether recognition justified disclosure relief.

1. The Extension Applications were recognised as foreign main proceedings under the Cross-Border Insolvency Regulations 2006. Dr Leite was recognised as the foreign representative of Buglin and Endipa.

2. Proceedings may be collective even where their likely effect is to pool assets for the benefit of creditors connected with another insolvent company. Applying Agrokor DD [2017] EWHC 2791 (Ch), recognition of proceedings involving a group is not precluded merely because recognition is sought for particular companies. The possible substantive consolidation of assets did not prevent the proceedings from being collective. The absence of any proposal to benefit only one creditor class distinguished Re Stanford International Bank [2011] Ch 33.

3. The proceedings were judicial interim proceedings pursuant to insolvency law and for the purpose of liquidation. The Brazilian court had appointed Dr Leite, required recovered money to be paid into court, and supervised his functions. His powers to preserve, manage and collect assets made him a foreign representative.

4. The procedural requirements in Article 15 and Schedule 2 were satisfied. The requirement to serve the application on the debtor was waived because Dr Leite had sole control of Buglin and Endipa and service on himself would serve no purpose. The requirements of Article 17 were met, and recognition was mandatory.

5. Article 21(1)(g) permitted relief available to an English insolvency office-holder. Under section 236 of the Insolvency Act 1986, the court’s discretion is unfettered but requires a careful balance between the office-holder’s reasonable need for information and the avoidance of an unreasonable, unnecessary or oppressive order. The approach in Re British & Commonwealth Holdings plc [1993] AC 426 was applied.

6. Amicorp was ordered to disclose documents and relevant information concerning Nilza, Buglin and Endipa, including documents held for Tipuana which related to the companies’ affairs. It was also required to provide details of its searches. Compliance was allowed 56 days, and Dr Leite was given liberty to apply.

This was a first-instance decision. The judgment records that Dr Leite’s appointment concerning Nilza had previously been recognised under the CBIR on 12 September 2016, but no appeal from that decision was before the court.