Jersey Unreported Judgments

[2010]JRC087

royal court

(Samedi Division)

6^th May 2010

Before     :

Sir Philip Bailhache, Kt., Commissioner, and Jurats Tibbo and Marett-Crosby.

 

IN THE MATTER OF THE REPRESENTATION OF ANGLO IRISH ASSET FINANCE

Advocate M. L. A. Pallot for the Representor.

judgment

the commissioner:

1.        This is a Representation by Anglo Irish Asset Finance Plc ("the bank") seeking an order that this Court issue a letter of request addressed to the High Court of Justice in England and Wales.  The proposed request is that the High Court should make an administration order appointing administrators to the property of St John Street Limited ("the company").  The company was incorporated in Jersey and has its registered office at Portman House, Hue Street, St Helier. 

2.        The short history is that the bank has lent money to the company in order to enable it to acquire and develop a substantial site at 156-176 St John's Street, London.  The company defaulted on its agreements and the bank made formal demand for the repayment of £30,500,000 plus accrued interest on 3^rd April, 2009.  The company was unable to pay and the bank exercised its powers to appoint receivers in respect of the property.  The receivers have managed to ensure the completion or near completion of the development.  They have only limited powers, however, and the bank now seeks to have administrators appointed.  There is no doubt that the company is insolvent.  It was unable to pay its debts as they fell due, and it is also insolvent on the balance sheet test.  

3.        The Court has had placed before it an affidavit sworn by Mr Richard Reuben, solicitor to the bank, and there was appended to that affidavit an opinion of English Counsel Mr Glen Davis, who is particularly experienced in this field.  Both the affidavit and the opinion set out the background to the receivership and the reasons why an administration order is sought.  The proposed letter of request will lay the foundation for such an order under Section 426 of the Insolvency Act 1986.  We are told that Jersey is a relevant country or territory under the terms of that Act so as to confer jurisdiction upon the English Court to make such an order at our request. 

4.        This Court has an inherent jurisdiction to issue a letter of request in the circumstances of this Representation.  Such a jurisdiction was exercised in two cases which have been placed before us, namely In Re OT Computers Limited 2002/29 and In the Matter of First Orion Amber Limited and Another [2009] JRC 126.  Before we exercise that jurisdiction we should however satisfy ourselves both that it is an appropriate case for such a request and that the English Court is likely to respond to it. 

5.        Counsel for the bank has explained that the powers available to Administrators are wider than those which may be exercised by Receivers.  The Receivers have been enabled to ensure that the contracts are entered by the company and its affiliates in relation to the development of the property have been brought substantially to a conclusion.  The Receivers have no duty, however, to deal generally with the claims of ordinary unsecured creditors nor to act outside the relatively restricted ambit laid down by the Insolvency Act and the security documentation pursuant to which they were appointed. 

6.        Administrators by contrast have extensive statutory powers and may do anything necessary or expedient for the management of the affairs, business and property of the company; in particular, as Advocate Pallot has explained, they will be able to take possession of the statutory books of the company from the directors. 

7.        We have been informed by Counsel that the purposes of an administration order may be defined as the satisfaction of one or more of three objectives:-

(i)        the first objective is to rescue the company as a going concern;

(ii)       the second objective is to achieve a better result for the company's creditors as a whole than would be likely if the company were wound up without first being placed in administration;

(iii)      the third objective is to realise property in order to make a distribution to one or more secured or preferential creditors. 

Counsel has told us that there is no prospect of rescuing the company as a going concern.  The advice of English Counsel is that the placing of the company in administration might achieve a better result for the company's creditors as a whole, and will certainly achieve the third objective of realising property in order to make a distribution to a secured creditor.  The making of an administrative order would give the bank confidence to inject more money into the development so as to generate a greater recovery. 

8.        We are accordingly satisfied that this is a proper case for a letter of request to be issued to the High Court.  English Counsel has opined that the High Court would consider this to be a suitable case in which to make an administration order in respect of the company if requested to do so by this Court.  The letter of request will accordingly issue in the terms of the draft placed before us by Counsel subject to minor modifications canvassed in oral submissions. 

Authorities

In Re OT Computers Limited 2002/29.

Representation of the Governor and Company of the Bank of Ireland [2009] JRC 126.