Morris, Noter
| Jurisdiction | Scotland |
| Judgment Date | 03 October 2007 |
| Date | 03 October 2007 |
| Docket Number | No 9 |
| Court | Court of Session (Outer House) |
Court of Session Outer House
Lord Drummond Young
Companies - Liquidation - Scottish winding-up proceedings ancillary to proceedings in England and Luxembourg - Whether concept of "ancillary winding up" recognised in Scots law - Whether competent for court to dispense with statutory requirement for final meeting - Insolvency Act 1986 (cap 45), sec 146(1)
Section 146(1) of the Insolvency Act 1986 (cap 45) provides, inter alia, "if it appears to the liquidator of a company which is being wound up by the court that the winding up of the company is for practical purposes complete the liquidator shall summon a final general meeting of the company's creditors".
The noter was appointed joint liquidator in Scotland of a Luxembourg company following letters of request granted on the application of liquidators appointed in England. The English winding up was the primary winding up in the United Kingdom but the company was also being wound up in Luxembourg. The Scottish assets of the company were realised and transferred to the English liquidators in terms of an order of the Court of Session. The noter sought various orders from the Court of Session in order to close the process in Scotland as follows: (a) a direction that the noter was not obliged by sec 146 of the Insolvency Act 1986 to summon a final meeting of the creditors of BCCI who dealt with its Scottish branch and were creditors in the Scottish winding up; (b) a direction under r 7.34(3)(a) of the Insolvency Rules 1986 that the noter should deliver all his books, papers and records of the winding up to the liquidators appointed to the company in England; and (c) an order that the noter be removed from office as liquidator in terms of sec 172(2) of the Insolvency Act 1986, such an order to take effect from delivering all his books, papers and records to the English liquidators.
Held that: (1) the concept of an "ancillary winding up" was recognised in Scots law although not mentioned expressly in the insolvency legislation (para 8); (2) the reasons for making one winding up ancillary to another were compelling and the court would be reluctant to impose any legal requirement that would threaten the possibility of such procedure (para 10); (2) subject to the fundamental policy objectives of insolvency law, the rules of procedure might be modified in such a way as best achieved the objectives of the ancillary winding-up (para 11); (3) in the present case the Scottish winding up was ancillary to the English winding up which was ancillary to the principal winding up in Luxembourg (para 12); (4) in the circumstances, no useful purpose would be served by a Scottish final meeting because of the ancillary nature of the winding up; the court might dispense with any procedural provision that would not serve a useful purpose notwithstanding the apparently mandatory wording of sec 146(1) (para 14); and the orders sought granted.
Re Bank of Credit and Commerce International (In Liquidation) (No 10)ELR [1997] Ch 213 commented upon.
Christopher Morris, liquidator of Bank of Credit and Commerce International SA lodged a note in the winding up of that company seeking certain orders and directions.
The cause called before the Lord Ordinary (Drummond Young) for a hearing.
Cases referred to:
Bank of Credit and Commerce International (In Liquidation) (No 10) (Re)ELRWLRUNK [1997] Ch 213; [1997] 2 WLR 172; [1996] 4 All ER 796
Commercial Bank of South Australia (Re)ELR (1886) 13 Ch D 174
HIH Casualty and General Insurance Ltd (Re)UNK [2005] EWHC 2125; [2006] 2 All ER 671
Marshall, PetrSC (1895) 22 R 697; 32 SLR 538
At advising, on 3 October 2007-
Lord Drummond Young- [1] On 14 January 1992 the noter was appointed joint liquidator in Scotland of Bank of Credit and Commerce International SA ('BCCI'). BCCI is a company incorporated under the law of Luxembourg. The noter's appointment followed letters of request made to the Court of Session under sec 426 of the Insolvency Act 1986 by the High Court in England. Those letters were granted on the application of the liquidators who had been appointed to BCCI by the High Court. The winding up of BCCI in England has been the primary winding up in the United Kingdom. BCCI is, however, also being wound up globally by the courts in Luxembourg, the country of its incorporation. The winding up has proceeded since 1992, and the noter now seeks certain directions and other orders from the Court of Session in order to close the process in Scotland.
[2] At this point it is convenient to summarise the history of the winding up in Scotland. A number of insolvency practitioners have held office with the noter as joint liquidators in Scotland of BCCI. The last joint liquidator was removed from office by order of the court dated 15 December 2004, and since then the noter has been the sole Scottish liquidator. Since the initial appointment the various Scottish liquidators have duly carried out their duties. The Scottish winding up has been 'ancillary' in the sense that the only functions of the Scottish liquidators have been to realise the assets of BCCI's Scottish branch and to make up a list of, and adjudicate upon the claims of, BCCI's creditors in Scotland. In practice, the adjudication of the...
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