The liquidators of BCCI in different jurisdictions had created a pooling agreement in the liquidation of the place of the company’s incorporation, namely Luxembourg to which all assets were to be remitted and in which all creditors were to share pari passu. Two problems arose. English law allowed set-off so that to the extent of the set-off a creditor was in effect secured but the law of Luxembourg did not. Also some creditors were entitled to prove in England but not in Luxembourg. The English liquidators applied to the court in England for directions.
Held: The court in England had no inherent power to disapply at its discretion substantive parts of the statutory scheme: ‘The accumulation of judicial endorsements of the concept of ancillary liquidations have, in my judgment, produced a situation in which it has become established that in an ‘ancillary’ liquidation the courts do have power to direct liquidators to transmit funds to the principal liquidators in order to enable a pari passu distribution to worldwide creditors to be achieved. The House of Lords could declare such a direction to be ultra vires. But a first instance judge could not do so and I doubt whether the Court of Appeal could do so.
But the judicial authority which has established the power of the court to give, in general terms, the direction to which I have referred has certainly not established the power of the court to disapply rule 4.90 or any other substantive rule forming part of the statutory scheme under the Act and Rules of 1986. Nor, in my opinion, has this line of judicial authority established the power of the court to relieve English liquidators in an ancillary winding up of the obligation to determine whether proofs of debt submitted to them should be admitted or to see to it, so far as they are able to do so, that creditors whose claims they do admit receive the pari passu dividend to which, under the statutory insolvency scheme, they are entitled.’
Judges:
Sir Richard Scott V-C
Citations:
[1997] Ch 213
Jurisdiction:
England and Wales
Cited by:
Cited – McGrath and Honey v McMahon and Others, Re HIH Casualty and General Insurance Ltd and others CA 9-Jun-2006
The insurance company was to be wound up. It operated internationally but was registered in Australia. The Australian liquidator now sought an order for the transfer of assets held here to Australia.
Held: It was inevitable that cross border . .
Lists of cited by and citing cases may be incomplete.
Insolvency
Updated: 01 May 2022; Ref: scu.244193
