BARINGS (UK) LIMITED & Ors v GALAPAGOS S.A.

Where requests to open insolvency proceedings are made in different Member States, the court first seised retains exclusive jurisdiction to open main proceedings until it has decided the request and declined jurisdiction. A later court cannot create competing main proceedings merely by declaring its proceedings to be main proceedings. The court receiving the later request must apply the relevant EU-law interpretation itself; it need not await formal action by the other Member State’s courts.

For UK insolvency jurisdiction, a company’s centre of main interests is assessed when the request to open proceedings is made. The registered-office presumption may be rebutted by an objectively ascertainable shift in management and administration, particularly where creditors are clearly informed. A subsequent shift does not ordinarily justify refusing to exercise jurisdiction. The court may also consider sufficient connection and practical benefit when exercising its discretion to wind up.

The Applicants sought a winding-up order against Galapagos S.A., a Luxembourg holding and finance company. The English proceedings began with an administration application in August 2019. While that application was pending, the Düsseldorf court opened purported main insolvency proceedings concerning the company. The English proceedings were stayed.

Following the CJEU’s judgment in Case C-723/20 Galapagos EU:C:2022:209, the Applicants sought to lift the stay and convert the application into a winding-up application. The issues were whether the Recast Insolvency Regulation remained applicable under Article 67(3)(c) of the Withdrawal Agreement, whether the company’s centre of main interests was in England for purposes of the UK insolvency regime, and whether the court should exercise its discretion to wind up the company.

1. The winding-up order was made. The Düsseldorf proceedings were not “main proceedings” for purposes of Article 67(3)(c) of the Withdrawal Agreement. Under Staubitz-Schreiber and Galapagos, the High Court, being the court first seised, retained exclusive jurisdiction to open main proceedings when the Düsseldorf court purported to do so. The Recast Insolvency Regulation therefore did not continue to govern these proceedings.
2. The principle of mutual trust did not require recognition of two competing sets of main proceedings. A court faced with competing proceedings must determine which proceedings are properly characterised as main proceedings by applying the Regulation and relevant CJEU authority. The German-law evidence concerning steps that the German courts might later take was irrelevant to that EU-law question.
3. The court had jurisdiction under the UK insolvency regime. The company’s centre of main interests was assessed as at 22 August 2019, when the request to commence proceedings was made. The registered-office presumption was rebutted by the relocation of directors and management to England, English-based meetings and administration, the Fareham office, notification to creditors and the apparent permanence of the move. The Luxembourg bank account, the location of the main asset and articles deeming remote meetings to occur at the registered office were not decisive.
4. The court would exercise its discretion to wind up. The company had a sufficient connection with England, including through pending English Part 7 proceedings concerning an English-law intercreditor agreement and the restructuring of the company. There was a clear and obvious benefit to the Applicants in ending the pending proceedings and placing the company under the control of an independent liquidator.