High Court Grants Order For Pre-Directions In Relation To Scheme Of Arrangement Potentially Affected By Brexit

In AXA Art Vershicherung AG, UK Branch and Others, Re [2019] 10 WLUK 186 Roth J considered a joint application from three companies for pre-directions with regard to a proposed business transfer scheme. The three applicants were a German company, a French company and an Irish company, all within the AXA group of insurers and all of which had UK branches. Following its acquisition of XL Group Ltd, AXA was seeking to restructure its operations and as part of this exercise sought to transfer the business of the German and French companies to the Irish entity with the transfer taking effect on 31 December 2019. Whilst the UK remained within the European Union, the proposed transfers did not require the approval of the Court under Part VII of the Financial Services and Markets Act 2000, as they fell within the remit of the excluded schemes under section 105(3) of the legislation. However, in the event of a hard Brexit with no transition period, the transfers would no longer be excluded schemes and would consequently require approval pursuant to Part VII. In light of the uncertainty as to (i) whether a hard Brexit will indeed occur; and (ii) whether this would be on 31 October 2019 or some other date, the applicants were concerned about the potential for being left with a very short time in which to effect any Part VII transfer that should prove to be necessary. Consequently they sought an order for pre-directions to mitigate this risk.

Roth J granted the application. In so doing, he held that the present circumstances clearly fell within those in which it would be appropriate for the Court to issue prospective guidance (as per Sir Geoffrey Vos C in Barclays Bank Plc, Re [2017] EWHC 1482 (Ch)) and noted that whilst the regulators had not attended the hearing, they had nevertheless been served and had confirmed that they did not object to the order being sought. However, he stressed that whilst the Court had jurisdiction to make orders in a preliminary form in circumstances where a final order could not be made as no settled scheme had yet...