Alard Investments Ltd

CourtRoyal Court
JudgeJ. A. Clyde-Smith,Jurats Kerley,Sparrow
Judgment Date24 June 2015
Neutral Citation[2015] JRC 137
Date24 June 2015

[2015] JRC 137




J. A. Clyde-Smith, Esq., Commissioner and Jurats Kerley and Sparrow

In The Matter of Alard Investments Limited and Upon the Application of Deutsche Pfandbriefbank AG — Representor
And In the Matter of an Application to Issue a Letter of Request to the High Court of England and Wales for the Appointment of an Administrator

Advocate D. V. Blackmore for the Representor.


Insolvency Act 1986.

HSBC Bank Plc re Tambrook [2013] JRC 046.

Re Tambrook Jersey Limited [2013] 2 WLR 1249.

Re Tambrook Jersey Limited [2014] Ch 252.

Representation of RBS Plc [2012] JRC 080.

Companies — application for letter of request to be issued to High Court of England and Wales in relation to insolvency.


On 15 th June, 2015, the Court granted the application of Deutsche Pfandbriefbank AG (“the Bank”) that a letter of request be sent to the High Court of England and Wales for its assistance in relation to the insolvency of Alard Investments Limited (“the Company”) by making an administration order under the provisions of the Insolvency Act 1986.


The application was similar to a number of previous applications that have been made for a letter of request where, as here:–

  • (i) The Company is incorporated in Jersey.

  • (ii) All of its assets (bar bank accounts) are in England and Wales and subject to security governed by English law.

  • (iii) The majority of its unsecured creditors are in England and Wales.

  • (iv) English counsel, in this case Lexa Hilliard QC, has confirmed that the English High Court would be minded to accede to such a request.

  • (v) The making of an administration order is more appropriate than any other insolvency procedure that could be invoked.


The last reported case in which a letter of request was issued in these circumstances was the representation of HSBC Bank Plc re Tambrook [2013] JRC 046. Initially assistance in that case was refused by the English High Court on the grounds that s.426(4) of the Insolvency Act 1986 did not empower the English Court to act merely because a foreign court had invited it to do so or in order to fill a gap in another jurisdiction's insolvency processes ( Re Tambrook Jersey Limited [2013] 2 WLR 1249). The High Court, it was held, was not being requested to assist the Jersey Court in any insolvency proceedings, but rather was being asked to provide a substitute for such proceedings. That decision was overturned by the English Court of Appeal ( Re Tambrook Jersey Limited [2014] Ch 252) when it was held allowing the appeal:–

“….. that section 426(4) of the Insolvency Act 1986 was by its wording applicable to courts having, rather than exercising, jurisdiction, or the corresponding jurisdiction, in insolvency law; that, although section 426 would not of itself empower the courts to issue or act upon a request in respect of a matter unrelated to insolvency, the courts would not be astute to equate “having” jurisdiction with “exercising” jurisdiction in the sense of connoting a requirement for the existence of some formal insolvency proceedings in a requesting state; that section 426(4) was to be given a broad interpretation, and was amply sufficient to enable the English court to “assist” the Jersey court as requested; that the judge had erred in finding that the English court was not being asked to assist the Jersey court in any endeavour when the latter's request in the circumstances was part of, and the exercise of, Jersey insolvency jurisdiction; that, accordingly, the judge had erred in his conclusion that there was no jurisdiction pursuant to section 426 of the 1986 Act to grant the bank's application for the administration order which it sought; and that, since the judge had found that if he had jurisdiction he should grant the application, an administration order would be made.”


The English Court of Appeal also confirmed that orders made by other Chancery judges in comparable circumstances on five previous occasions were orders which the English High Court had jurisdiction to make (at page 264 of that judgment).


The facts in the case before us can be summarised as follows:–

  • (i) The Company was incorporated in Jersey on 24 th June, 1998.

  • (ii) By a credit agreement dated 8 th July, 1998, as supplemented and amended, the Company entered into a facility with Bayerische Hypotheken und Wechsel-Bank AG, London Branch pursuant to which a loan of up to £41,260,000 was made available to the Company. By a series of restructuring transactions which it is not necessary to describe the facility was eventually acquired by the Bank on 27 th November, 2008.

  • (iii) £40,000,000 of the facility was drawn down and used to finance a portfolio of 19 commercial properties, some of which were vested in the name of the Company and some in the name of a company incorporated in England, namely Hypo Property Investment (1992) Limited (“HPI”), the beneficial interest of which was held for the Company.

  • (iv) As security for the facility, on 8 th July, 1998, the Company executed a debenture containing fixed and floating charges in favour of the Bank and in particular a first fixed charge over the Company's legal and beneficial interest in the properties.

  • (v) Six of the properties have been sold and the remaining properties, all of which are tenanted, have been valued to the order of £22,460,000 as against a liability to the Bank in the sum of £33,376,653.34, a very substantial negative equity.

  • (vi) There have been a number of defaults under the facility and it was not repaid on the due date for repayment, namely 8 th July, 2013. On 27 th May, 2015, the Bank served a formal demand for the amount then outstanding under the facility which has not been met and accordingly under the terms of the debenture the charges over the properties became enforceable.


The Company had been given notice of the application for a letter of request and wrote on 11 th June, 2015, accepting that whilst it had not been able to verify the exact amount, it acknowledged that a significant sum was due which it was unable to meet and that the Bank was entitled to take action to enforce its security. It confirmed that the vast majority of its assets comprising an investment portfolio of freehold and leasehold properties were located in England and Wales and it had no significant assets in Jersey.


It would have been open to the Bank to appoint receivers and managers under Clause 9 of the debenture but this was not its preferred option for the reasons summarised by counsel in her opinion:–

“5. Receivership...

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