Representation of RBS Plc

JurisdictionJersey
CourtRoyal Court
JudgeJ. A. Clyde-Smith,Jurats Morgan,Nicolle
Judgment Date18 April 2012
Neutral Citation[2012] JRC 80
Date18 April 2012

[2012] JRC 80

ROYAL COURT

(Samedi)

Before:

J. A. Clyde-Smith, Esq., Commissioner, andJurats MorganandNicolle.

IN THE MATTER OF THE REPRESENTATION OF BANK OF SCOTLAND PLC

AND IN THE MATTER OF THE INHERENT JURISDICTION OF THE COURT

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.

Between
Bank of Scotland Plc
Representor
and
The Control Centre General Partner Limited
Respondent

Advocate C. J. Swart for the Representor.

Advocate R. O. B. Gardner for the Respondent.

Authorities

English Insolvency Act 1986.

Limited Partnerships (Jersey) Law 1994.

Insolvency Act 1986.

In Re OT Computers Limited 2002/29 .

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

In the matter of the Representation of Anglo-Irish Asset Finance [2010] JRC 087

In the matter of an application by Bank of Scotland PLC and the Governor and Company of the Bank of Ireland [2011] JRC 232A .

Bankruptcy (Désastre)(Jersey) Law 1990.

Loi (1839) sur les Remises des Biens.

Companies — jurisdiction of the court and issues arising in relation to a letter of request for appointment of an administrator.

THE COMMISSIONER:

1

On 19 th March, 2012, Bank of Scotland PLC (hereinafter referred to as “the representor”) was granted an application for the issue of a Letter of Request to the High Court of Justice of England and Wales, Chancery Division, Companies Court (“the English Court”) seeking the making of an administration order under the English Insolvency Act 1986, with respect to the respondent, Control Centre General Partner Limited (“the Company”).

2

The representor's representation dated 2 nd March, 2012, first came before the Court on 9th March, 2012, when the Court ordered that it should be served upon the Company and its legal advisers, Messrs Bedell Cristin, with the Company being convened to appear on 19th March, 2012.

3

Notice of the representation has been given to the Viscount by letter dated 7 th March, 2012, and he has confirmed that he has no observations to make in relation to it.

4

The Company is a limited liability company incorporated under the laws of Jersey on 30th November, 2005, and is the general partner of the Control Centre Limited Partnership. This is a Jersey limited partnership registered on 30 th November, 2005, under the Limited Partnerships (Jersey) Law 1994. The limited partner of the partnership is Bedell Corporate Trustees Limited, as trustee of the Control Centre Exempt Unit Trust. All of the assets and liabilities of the partnership are held and owed by the Company in its capacity as the general partner.

5

The partnership was established for the purpose of acquiring and developing property in the United Kingdom. The Company is indebted to the representor in the sum of £100,483,289.54, which sum is due and payable. The representor's claim against the Company arises from loan facilities made available to the Company on 7 th July, 2006, pursuant to a facility agreement which became repayable in full on 5 th July, 2011. The Company has accepted by letter dated 16 th February, 2012, that the loan is overdue for payment. The partnership's latest accounts (and in effect, the Company's accounts) show that it has total assets of £110,842,105 and total liabilities of £145,555,279. The Company therefore appears to be insolvent on both a cash flow and balance sheet basis.

6

The Company owns five freehold commercial properties situated in England, together with the benefit of long term leases in respect of each of the properties. On 7 th July, 2006, the Company entered into a security agreement with the representor in terms whereof the Company granted fixed and floating charges over all its assets in favour of the representor. On 11 th July, 2006, the Company entered into a supplementary security agreement, under which the Company granted a further legal mortgage over additional assets and a fixed charge over all interests in any freehold or leasehold property owned by the Company.

7

The representor has the right under the security agreements to appoint receivers over the secured assets. The security agreements also entitle the representor to appoint English law administrators to the Company.

8

On 10 th February, 2012, in accordance with its rights under the security agreements, the representor appointed receivers of all the property, assets and rights of whatever nature of the Company mortgaged or charged by way of fixed charge.

9

The receivers have powers to deal with the assets over which they are appointed but their powers are not as extensive as those of an administrator appointed pursuant to the provisions of the Insolvency Act 1986.

10

We were informed that upon the appointment of administrators, the representor would envisage either removing the receivers or limiting the scope of their appointment to ensure any duplication of work and effort as between the receivers and the administrators is avoided.

11

If the Company has its centre of main interests in England and Wales, the representor would have the right to appoint administrators to the Company using the “ out of Court route” provided for in paragraph 14 Schedule B1 of the English Insolvency Act 1986. However, where a petitioner is unable to show that a company's centre of main interest is in England and Wales, the English High Court has no power, in the absence of a Letter of Request, to make an administration order against that company. The representor was unable to show that the Company has its centre of main interests in England and Wales; hence the application for a Letter of Request to be issued to the English Court.

12

The application was supported by an affidavit by Ewan Bruce Tocher, the Lead Director within Corporate Real Estate, Business Support, at the representor. He set out the reasons why the representor considered it appropriate and advantageous for administrators to be appointed to the Company by the English Court:-

  • (i) The Company has a very substantial connection with England and Wales.

  • (ii) The large majority of the Company's assets, including the properties which represent the substance of its business, are located in England.

  • (iii) The properties are charged in favour of the representor.

  • (iv) The Company's financing and security documentation is governed by English law.

  • (v) The representor was unaware of the Company having any material assets in Jersey or creditors based in Jersey other than possibly the limited partner of the partnership (whose claims are subordinated in any event) and professional advisers. There is a very real doubt that there will in any event be sufficient value to make a distribution to any other creditors of the Company.

  • (vi) The Company submitted to the jurisdiction of the English courts in relation to any disputes in connection with the facilities agreement. The Company has also waived any objection to the English courts as regards proceedings that may be taken against it.

  • (vii) The security agreements expressly contemplate the appointment of administrators to the Company.

  • (viii) There could be significant value in capital allowances held by the Company in connection with the properties. It would be necessary for an administrator, as recognised officer of the Company, to sign the election for Her...

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