Luc A. Despins v Ho Wan Kwok

Recognition of foreign insolvency proceedings under the Cross-Border Insolvency Regulations 2006 requires the court to verify each statutory and Model Law requirement, including the status of the proceeding, the foreign representative and jurisdiction. Recognition may be granted despite an outstanding appeal against the representative’s appointment where the appeal concerns identity rather than office and there is no stay.

Disclosure assistance may be ordered where it is necessary to protect the debtor’s assets or creditors’ interests. A trustee may inspect privileged documents under the Insolvency Act 1986 without acquiring the right to waive the bankrupt’s privilege. Joint clients cannot assert their joint privilege against one another, although safeguards may be imposed against misuse or waiver.

Luc A. Despins, appointed as trustee in Ho Wan Kwok’s Chapter 11 proceedings in the United States, sought recognition of those proceedings in England as foreign main proceedings. He also sought documents held by Harcus Parker concerning English litigation in which Kwok and two companies claimed approximately $500 million.

The application was unopposed as to recognition. Disclosure was resisted principally on grounds of privilege, the Applicant’s position as a partner of Paul Hastings, and an alleged conflict involving UBS. The court also considered whether access should be restricted to a confidential exhibit filed with the application.

1. Recognition. Recognition was granted. The US Chapter 11 case satisfied Article 17(1) of the Model Law, incorporated by the Cross-Border Insolvency Regulations 2006. The proceeding was a foreign proceeding, the Applicant was a foreign representative, the documentary requirements were met, and the High Court had jurisdiction because the debtor had assets in England and Wales.
2. An outstanding appeal against the Applicant’s appointment did not prevent recognition. It concerned his identity rather than the existence of his office, and there was no stay. Recognition could be revisited if the appointment were later reversed.
3. The public-policy exception in Article 6 was not engaged. The fact that the Applicant was a partner of a firm with offices in China and Chinese clients did not establish that recognition would be manifestly contrary to public policy. The English litigation was carved out from the automatic stay under Article 20.
4. Disclosure. Articles 21(1)(d) and (g), together with sections 311, 312 and 366 of the Insolvency Act 1986, gave the court a discretion to order delivery of documents where necessary to protect the debtor’s assets or creditors’ interests. That threshold was met because the English litigation might be a substantial asset and participation without the file could expose the estate to adverse costs.
5. Under a joint retainer, each client has a joint interest in privileged communications and cannot assert joint privilege against another joint client. The Applicant did not acquire the Respondent’s privilege merely by appointment, but he could inspect the documents. He could not waive the privilege, and undertakings not to waive it, together with the existing carve-out concerning Paul Hastings, supplied adequate protection.
6. The balance favoured disclosure. Documents subject to Ace Decade’s sole privilege and documents unrelated to the English litigation were excluded. Access to the original confidential exhibit was restricted under CPR Rule 5.4C(d), and a replacement exhibit was permitted.