Edgeworth Capital (Luxembourg) S.A.R.L. v Glenn Maud
| Jurisdiction | England & Wales |
| Judge | Mr Justice Snowden |
| Judgment Date | 24 April 2020 |
| Neutral Citation | [2020] EWHC 974 (Ch) |
| Court | Chancery Division |
| Docket Number | Case Nos. BR-2014-002375 and BR-2015-001180 |
| Date | 24 April 2020 |
In the Matter of Glenn Maud
And in the Matter of the Insolvency Act 1986
[2020] EWHC 974 (Ch)
Mr Justice Snowden
Case Nos. BR-2014-002375 and BR-2015-001180
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
IN BANKRUPTCY
Royal Courts of Justice
Rolls Building, Fetter Lane,
London EC4A 1NL
Jonathan Nash QC and Cleon Catsambis (instructed by Farrer & Co LLP) for Edgeworth Capital (Luxembourg) S.A.R.L.
Stephen Robins (instructed by Hogan Lovells International LLP) for The Libyan Investment Authority
Joseph Wigley and Edward Crossley (instructed by Bryan Cave Leighton Paisner LLP) for Mr. Maud
Andrew Rose (instructed by Joseph Hage Aaronson LLP) for Navarro Ventures S.A.R.L.
Hearing dates: 20–22, 25, 27 February 2019
Approved Judgment
This judgment follows a hearing in February 2019 (the “2019 Hearing”) of two petitions for a bankruptcy order to be made in respect of Mr. Glenn Maud (“Mr. Maud”). One petition (BR-2014-002375) was by The Libyan Investment Authority (the “LIA” and the “LIA Petition”) and the second (BR-2015-001180) was by Edgeworth Capital (Luxembourg) S.à.r.l. (“Edgeworth” and the “Edgeworth Petition”).
I set out the background to these complex and highly unusual bankruptcy proceedings in two earlier judgments on the Edgeworth Petition. These were the judgment on appeal from a bankruptcy order made by Mr. Registrar Briggs: [2016] EWHC 2175 (Ch) (the “Appeal Judgment”); and my judgment following the first hearing of the Edgeworth Petition before me: [2018] EWHC 247 (Ch) [2019] Ch 15 (the “First Judgment”).
BACKGROUND
The labyrinthine details of the earlier stages of the two Petitions are set out in those two judgments, but for the purposes of this judgment I can sketch the outline more broadly.
The Edgeworth Petition is one aspect of a long-running set of proceedings in England and Spain which relate to a group of three Spanish and Dutch companies known as the “Marme Group”. Until recently, the Marme Group owned the “Santander Asset” which is a substantial office and real estate complex in Boadilla del Monte, Madrid. That complex, which is known locally as “Financial City”, houses the international headquarters of Banco Santander and is let on a long lease to a company in the Santander Banking group.
The Santander Asset was owned and operated by a Spanish company, Marme Inversiones 2007 S.L. (“Marme”). Marme was and is wholly owned by a Dutch company, Delma Projectontwikkeling BV (“Delma”), which in turn was and is wholly owned by another Dutch company known as Ramblas Investments BV (“Ramblas”). One half of the shares in Ramblas were and are registered in the names of each of Mr. Maud and a business associate of his, Mr. Derek Quinlan (“Mr. Quinlan”).
As a result of its rental income from Banco Santander, the Santander Asset is a very valuable property investment. However, the companies in the Marme Group were heavily indebted as a result of the financing incurred to acquire the Santander Asset. These financial obligations led to the companies in the Marme group entering insolvency proceedings in Spain in February 2014. At a relatively early stage of those proceedings the insolvency administrator appointed in Spain (the “Administrator”) proposed that there should be an open auction and sale of the Santander Asset to the highest bidder.
The Administrator's attempt to implement that plan led to intense litigation in Spain throughout the insolvency proceedings between a number of parties who were interested in acquiring control of the Santander Asset. These parties included Mr. Maud and his associates on the one hand, and Edgeworth (which is a property investment company associated with Mr. Robert Tchenguiz (“Mr. Tchenguiz”)), and its associates on the other. In very broad terms, the battle for control of the Santander Asset has been between Mr. Maud and Mr. Quinlan as incumbent shareholders of the Marme Group, and Edgeworth and its associates as the holders of a large proportion of the Marme Group's debt.
The acquisition of the Santander Asset by the Marme Group in September 2008 was financed by a number of loans:
i) A “Senior Loan” of €1.575 billion to Marme through a syndicate of banks headed by RBS.
ii) A “Junior Loan” of €200 million from RBS to Ramblas, which was secured, among other things, by (i) a pledge executed by Mr. Maud and Mr. Quinlan in favour of RBS over their shares in Ramblas (the “Ramblas Share Pledge”), (ii) a pledge executed by Ramblas in favour of RBS over its shares in Delma (the “Delma Share Pledge”), and (iii) a personal guarantee executed by Mr. Maud and Mr. Quinlan in favour of RBS, limited to €40 million (the “Personal Guarantee”).
iii) A “Personal Loan” of €75 million by RBS to Mr. Maud and Mr. Quinlan jointly and severally, which loan was secured over various assets of Mr. Maud and Mr. Quinlan.
iv) Pursuant to its terms, the monies advanced under the Personal Loan were on-lent to Ramblas together with other funds from Mr. Quinlan and from a company owned by Mr. Maud called Cruz Holdings Limited (“Cruz”) in the total amount of €148.5 million (the “Shareholder Loans”).
In addition, Mr. Maud, Cruz and Mr. Quinlan entered into a subordination agreement which subordinated repayment of the Shareholder Loans to repayment of the Junior Loan by Ramblas; and Mr. Maud, Cruz and Mr. Quinlan granted third party security to RBS over their rights in respect of the Shareholder Loans to secure repayment of the Junior Loan by Ramblas.
In September 2010 Mr. Maud and Mr. Quinlan defaulted on an interest payment on the Personal Loan, and RBS took the opportunity to accelerate the loan and demand repayment. Only a partial repayment was forthcoming.
Thereafter, in late 2010, RBS sold the Junior Loan and the Personal Loan and their related security rights to Edgeworth and its then funder, Aabar Block S.a.r.l. (“Aabar”) which is an investment company controlled by the Abu Dhabi sovereign wealth fund. Edgeworth and Aabar jointly acquired the Junior Loan and its related security (the Ramblas Share Pledge, the Delmas Share Pledge and the Personal Guarantee) for about €195 million. They also paid a mere €5,000 to acquire the Personal Loan and its related security.
In June 2011, Edgeworth and Aabar obtained judgment from Teare J in the Commercial Court against Ramblas on the Junior Loan and interest in the sum of about €216.6 million, and judgment against Mr. Maud and Mr. Quinlan in the sum of about €52.6 million in respect of the Personal Loan and interest. Receivers were also appointed over Mr. Maud's, Cruz's and Mr. Quinlan's rights in respect of the Shareholder Loans (the “Receivers”).
After judgment against him, and following his involvement in an unrelated dispute in relation to the Coroin group of companies which owned hotels including the Savoy, Mr. Quinlan conditionally agreed to sell his shares in Ramblas to Edgeworth and Aabar; the condition being that the transfer became permissible pursuant to the Articles of Association of Ramblas.
Having reached an agreement with Mr. Quinlan, Edgeworth and Aabar then sought to pursue Mr. Maud and to enforce their security rights in respect of his shares in Ramblas. After failing to enforce their security directly through litigation in Holland, they turned their attention to attempting to bankrupt Mr. Maud in England, serving him with a statutory demand in June 2014, based upon his liability of about €52.6 million in respect of the judgment on the Personal Loan, less the estimated amount of security which they held for that debt.
In addition, in October 2014 Edgeworth and Aabar demanded payment of €40 million from Mr. Maud under his Personal Guarantee, and when payment was not forthcoming commenced proceedings in the Commercial Court against him. The trial of that claim took place in November 2015, when Edgeworth and Aabar obtained judgment against Mr. Maud for €40 million. Having heard expert evidence on Spanish law, Knowles J rejected an argument by Mr. Maud that the Personal Guarantee had been discharged by Article 97.2 of the Spanish Act on insolvency 22/2003 (“Article 97.2”). Knowles J held that, even if it were applicable to the Personal Guarantee (which was governed by English law), as a matter of Spanish law, Article 97.2 only applied to guarantees in rem given by the debtor company which was subject to the insolvency proceedings, and did not apply to guarantees given by a third party such as Mr. Maud.
The Edgeworth Petition
After being served with the statutory demand by Edgeworth and Aabar, Mr. Maud applied to set it aside. One of the grounds advanced by Mr. Maud was that Edgeworth and Aabar were pursuing an illegitimate collateral purpose which made their petition an abuse of process. The basis for this argument was that the Articles of Association of Ramblas contain a provision that if a shareholder loses the right to dispose of his property (e.g. is declared bankrupt) his shares must be offered to the other shareholders at a price that, if not agreed, is to be determined by three independent experts.
Mr. Maud alleged that Edgeworth and Aabar were motivated to trigger the provision in the articles of Ramblas and to obtain control of Mr. Maud's shares in Ramblas by that route. It was said that, together with their agreement to acquire Mr. Quinlan's shares, this would enable them to obtain control of the Santander Asset via ownership of the...
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