Lloyd's Maritime and Commercial Law Quarterly
Ancillary liquidations and pari passu distribution in a winding-up by the court
Chee Ho Tham *
The doctrine of ancillary liquidations stands at a crossroads. In
Re HIH Casualty and General Insurance, the House of Lords stood evenly divided over whether that doctrine might be applied to permit the court to direct English liquidators in an ancillary liquidation to remit assets to foreign liquidators conducting the principal liquidation, even where such remission would result in an ultimate distribution of assets to unsecured creditors at variance with what such creditors would have received had the distribution been conducted by an English liquidator pursuant to English conceptions of
pari passu distribution. This paper suggests that the insolvency legislation, closely read, reveals more support for application of ancillary liquidation doctrine in these circumstances so as to permit remission of assets than might initially be assumed.
A. INTRODUCTION
The multi-national corporation, one of the most significant developments in commercial life of the last century and a half, continues to play an increasingly important role in this. Any reasonably well-developed system of law must cater for the multi-jurisdictional disputes in which a multi-national corporation is liable to be entangled so as to address questions of presence, domicile, recognition of the corporation’s separate personality and the operation of the corporate veil, and so forth. One area of particular complexity is where a multi-national corporation is subjected to insolvency proceedings1
in concurrent jurisdictions. This complexity is not new, as English courts have been empowered to wind up foreign companies since 1862.2
But, even if some improvements have been made through statute, age has not brought with it clarity.
Statutory guidance to manage the conduct of concurrent English and foreign liquidation proceedings has gathered apace in the United Kingdom. Three of the most widely applicable examples include the Council Regulation (EC) 1346/2000 of 29 May 2000 on insolvency proceedings (the “EC Regulation”),3
the Cross-Border Insolvency Regulation
* Associate Professor of Law, Singapore Management University. Research funding for this paper was provided by the Singapore Management University Office of Research.
1. This includes, of course, the liquidation of the company. But analogous problems occur in relation to attempted “rescues” of the company, such as the North American Chapter 11 procedure, or the English form of administration.
2. Companies Act 1862 (25 & 26 Vict, c 89), s 199. The modern-day equivalent may be found in the Insolvency Act 1986 (c 45) (“IA 1986”), s 220.
3. Which came into force in the European Union Member States (except Denmark), on 31 May 2002.
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