Nektan (Gibraltar) Ltd, Re In the Matter of the Insolvency Act 1986

The court made an administration order under paragraph 12(1)(a) of Schedule B1 to the Insolvency Act 1986 after finding that the statutory conditions in paragraph 11( a ) and ( b ) of Schedule B1 were met and that administration was reasonably likely to achieve a better result for creditors than winding up (paragraph 3(1)(b)). The main jurisdictional issue was whether a company incorporated in Gibraltar could be a "company" for the purposes of Schedule B1 so that English courts could make an administration order. The judge held that the EU Insolvency Regulation (Regulation (EU) 2015/848) did not preclude English jurisdiction and, on the facts, the presumption that the company's centre of main interests (COMI) was at its registered office in Gibraltar was rebutted. The court found COMI to be in England because key management, finance, sales and creditor contact functions were carried out in England and were ascertainable by third parties, and HM Revenue & Customs was the company's dominant creditor. The judge also analysed paragraph 111 Schedule B1 (the statutory definition of "company") and concluded that, while its drafting is unclear in places (particularly as to the status of Gibraltar and the use of the term "EEA State"), the English court could exercise jurisdiction in relation to a Gibraltar incorporated company where COMI is in England.

This was an urgent ex parte application by Nektan (Gibraltar) Limited for the appointment of administrators under paragraph 12(1)(a) of Schedule B1 to the Insolvency Act 1986. The company, incorporated in Gibraltar and the principal operating subsidiary of Nektan plc, operated an online gambling platform (predominantly B2C) and had incurred a large liability to HM Revenue & Customs for Remote Gaming Duty following a 2019 rate increase. The company sought administration in order to enable a sale of its B2C business to proceed immediately after appointment of administrators, so as to preserve the UK gambling licence and avoid a winding up which would have led to loss of the licence and a materially worse result for creditors.

Issues framed by the court:

• Whether the English court had jurisdiction to make an administration order in respect of a company incorporated in Gibraltar under Schedule B1;
• Whether the conditions for making an administration order (paragraph 11(a) and (b) Schedule B1 and paragraph 3(1)(b)) were satisfied;
• Where the company's centre of main interests (COMI) was situated for the purposes of Article 3 of the EU Insolvency Regulation and paragraph 111 Schedule B1.

The court's reasoning:

• The EU Insolvency Regulation determines which Member State may open insolvency proceedings but not territorial jurisdiction within a Member State; the Regulation applies to Gibraltar as a territory to which the Treaties apply. That did not, however, resolve the domestic statutory question under paragraph 111 of Schedule B1.
• The statutory definition of "company" in paragraph 111 was analysed. The judge found Gibraltar was not an "EEA State" as defined in s 436 of the Insolvency Act, but concluded that the apparent drafting difficulties in paragraph 111 should be read in a way that reflected the purpose of the EU Regulation. Although the drafting was unclear, the court considered that English jurisdiction would extend to a Gibraltar incorporated company where COMI was located in England.
• The presumption that COMI equals registered office (Gibraltar) was rebutted on the evidence: key management and administrative functions (finance, sales, accounts, HR) were carried out in England and were ascertainable by third parties; the majority of customers and trade creditors were UK-based; significant creditor contact and dealings with HMRC were handled in London; and commercial contact used a London telephone number. These factors pointed to COMI in England despite contracts being governed by Gibraltar law and the registered office being in Gibraltar.
• On that basis the statutory conditions for administration were satisfied and an administration order was made so that administrators could effect the proposed sale and seek a better outcome for creditors than liquidation.

The judgment also comments on the drafting uncertainties in paragraph 111 Schedule B1 and the interplay with Gibraltar's domestic measures, noting that the issue is not free from doubt.

An administration order was made. The court concluded that the statutory conditions for administration under Schedule B1 were satisfied and that the presumption that the company's COMI was its Gibraltar registered office was rebutted by evidence showing that central management and administration and creditor-facing functions were carried out in England. The judge further analysed paragraph 111 Schedule B1 and the territorial application of the EU Insolvency Regulation in relation to Gibraltar, concluding that English jurisdiction was available in the circumstances.