Insolvency And Restructuring: Mutual Crossborder Insolvency Assistance: Section 426, Insolvency Act 1986

HSBC Bank Plc -v- Tambrook Jersey Limited [2013] EWCA Civ 576 22 May 2013 On appeal from [2013] EWHC 866 (Ch) 12 April 2013

On 22 May 2013 the Court of Appeal of England and Wales delivered the reasoned judgment for allowing the appeal from the decision of the High Court of 12 April 2013 which we referred to in an e-alert dated 2 May 2013. The judgment provides a welcome confirmation of the importance of co-operation, reducing complexity and cost and acting in the best interest of creditors in insolvency matters.

The Court of Appeal stated that the request for assistance by the Royal Court of Jersey to the English High Court made under section 426 of the Insolvency Act 1986 should be accepted and consequently ordered that Tambrook Jersey Limited, a Jersey incorporated company with property in England, should in all the circumstances be placed into English administration.

Section 426(4) of the Insolvency Act 1986 states "The courts having jurisdiction in relation to insolvency law in any part of the United Kingdom shall assist the courts having the corresponding jurisdiction in any . . . relevant country or territory". "country or territory" includes Jersey.

Mr Justice Mann in the High Court had held that he had no jurisdiction to make the order as the English Court was not "assisting" the Jersey Court "in its functions as an insolvency court". It was not "being asked to assist the Jersey Court in any endeavour." It was instead being asked to "provide insolvency proceedings in lieu of any Jersey insolvency proceedings".

He said "This court cannot "assist" another court which is not actually doing anything, or apparently intending to do anything, in its insolvency jurisdiction".

In the Court of Appeal, after citing authorities, Lord Justice Longmore said this interpretation and approach was unduly and unnecessarily restrictive for the following reasons:

Section 426 was not applicable "to courts exercising jurisdiction in relation to insolvency law"; it is, by its wording, applicable to courts having jurisdiction. Section 426(4) and (5) are to be given a broad interpretation. There was no reason to apply a narrow and restrictive approach. This interpretation did not infringe the principle of "modified universalism" and to decide otherwise would tend to the opposite conclusion and lead to the need for separate formal insolvency processes and would run up needless costs. The Jersey Court was...