Re Maud; Maud v Aabar Block S.a.r.l and another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Snowden |
| Judgment Date | 08 September 2016 |
| Neutral Citation | [2016] EWHC 2175 (Ch) |
| Docket Number | Case No: 1978 of 2015 |
| Court | Chancery Division |
| Date | 08 September 2016 |
In the Matter of Glenn Maud
and
In the Matter of the Insolvency Act 1986
[2016] EWHC 2175 (Ch)
Mr. Justice Snowden
Case No: 1978 of 2015
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN BANKRUPTCY
On Appeal from Mr. Registrar Briggs
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Mr. Andrew Clutterbuck QC and Mr. Joseph Wigley (instructed by Berwin Leighton Paisner LLP) for the Appellant
Mr. Richard Fisher (instructed by Freshfields Bruckhaus Deringer LLP) for the First Respondent
Mr. Antony Zacaroli QC and Mr. William Willson (instructed by Stephenson Harwood LLP) for the Second Respondent
Hearing dates: 11 and 12 July 2016
Introduction
This is an expedited application for permission to appeal, with appeal to follow if permission is granted, against a bankruptcy order made by Mr. Registrar Briggs on 3 June 2016 in respect of the appellant, Mr. Glenn Maud ("Mr. Maud"). The bankruptcy order has been stayed pending determination of this application as a result of an order that I made on 2 June 2016: see [2016] EWHC 1319 (Ch).
The background to the bankruptcy proceedings is both complicated and unusual. The petition is merely one aspect of a wider set of proceedings in England and Spain which have at their heart the arrangements for the financing and ownership of a group of Spanish and Dutch companies known as "the Marme Group" that owns a very substantial office and real estate complex in Boadilla del Monte, Madrid. That complex has been let on a long lease to a company in the Santander Banking group and houses the international headquarters of Banco de Santander. The complex is known locally as "the Financial City" and the asset that it represents has been referred to throughout the proceedings as "the Santander Asset". On any view, it is an asset of substantial value worth several billion euros.
The parent company of the Marme Group which owns the Santander Asset is owned in equal proportions by Mr. Maud and a business associate of his, Mr. Derek Quinlan ("Mr. Quinlan"). The companies in the group are, however, heavily indebted as a result of incurring the finance for the acquisition of the Santander Asset, and they have entered insolvency proceedings in Spain. In the course of those proceedings, the Spanish court has approved a liquidation plan under which the assets of the group – principally the Santander Asset — will be sold to the highest bidder with a view to repaying the debts of the Marme Group and (possibly) returning some value to its shareholders.
Although others may also be interested in acquiring the Santander Asset, for present purposes the main protaganists who have submitted rival bids to the Spanish insolvency administrators have been (on the one side) Mr. Maud and a number of investment companies with which he formed an alliance, including in particular a private equity firm based in California called Global Asset Capital Europe LLC ("GAC") and a London-based investment firm called AGC Equity Partners ("AGC"); and (on the other side) the two creditors who have petitioned for Mr. Maud's bankruptcy, namely Aabar Block S.a.r.l. ("Aabar") and Edgeworth Capital (Luxembourg) S.a.r.l. ("Edgeworth"). Aabar is an investment company which is financed and controlled by the Abu Dhabi sovereign wealth fund. Edgeworth is an investment company advised by Mr. Robert Tchenguiz, who is a property entrepreneur. Where appropriate, I shall refer to Aabar and Edgeworth collectively as "the Petitioning Creditors".
In order that the arguments on the appeal can be understood, it is necessary to provide at least an outline of the complex ownership structure of the Santander Asset and the twists and turns of the Spanish insolvency and the English litigation to which I have referred. In so doing I do not propose to refer to every detail of the proceedings and the voluminous documentation that has been generated over the last several years.
The Marme Group and the acquisition of the Santander Asset
The Santander Asset was originally acquired in September 2008 by the Marme Group which consists of three companies. 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 Mr. Quinlan.
The acquisition of the Santander Asset was financed by a number of loans agreed on 12 September 2008:
i) A "Senior Loan" of €1.575 billion to Ramblas through a syndicate of banks headed by Royal Bank of Scotland ("RBS").
ii) A "Junior Loan" of €200 million from RBS to Ramblas, which was secured, among other things, by (a) a pledge executed by Mr. Maud and Mr. Quinlan in favour of RBS over their shares in Ramblas (the "Ramblas Share Pledge"), (b) a pledge executed by Ramblas in favour of RBS over its shares in Delma (the "Delma Share Pledge"), and (c) 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. Pursuant to its terms, the monies advanced under the Personal Loan were on-lent by Mr. Maud and Mr. Quinlan to Ramblas (the "Shareholder Loans").
In September 2010 Mr. Maud and Mr. Quinlan made late payment of interest on the Personal Loan, which entitled RBS to accelerate the loan and make demand for its repayment. RBS, which had its own difficulties at the time, made such demand on 19 September 2010. This produced only a partial repayment of €25 million.
Aabar and Edgeworth become involved
It was at this stage that Aabar and Edgeworth appeared on the scene. In November 2010 they bought from RBS (a) the rights against Mr. Maud and Mr. Quinlan in respect of the balance of the Personal Loan and the accompanying securities, (b) the rights against Ramblas in respect of the Junior Loan together with the accompanying rights under the Ramblas and Delma Share Pledges and the Personal Guarantee, and (c) the rights against Ramblas under a further agreement known as the "Upside Fee Agreement" (the "UFA").
Shortly thereafter, in December 2010, Aabar and Edgeworth accelerated the Junior Loan and in February 2011 they brought proceedings in England against Mr. Maud and Mr. Quinlan in respect of the Personal Loan and against Ramblas in respect of the Junior Loan. On 17 June 2011, orders were made by consent by Mr. Justice Teare giving judgments against Mr. Maud and Mr. Quinlan on the balance of the Personal Loan and interest in the sum of about €52.6 million. Subject to credit being given for the estimated value of security held (c. €10 million), it is this judgment debt that forms the basis for the bankruptcy petition against Mr. Maud. On the same day Aabar and Edgeworth also obtained judgment against Ramblas on the Junior Loan and interest in the sum of about €216.6 million.
The 2011 Agreements concerning Mr. Quinlan's shares in Ramblas
Aabar and Edgeworth next sought to acquire Mr. Quinlan's shares in Ramblas. This was achieved via the involvement of some of the parties to a separate dispute over the ownership and control of an unrelated company known as Coroin Limited ("Coroin"), which owned a group of hotels including The Savoy. The connecting factor was that one of the assets pledged by Mr. Quinlan to RBS to secure the Personal Loan was a substantial shareholding in Coroin. However, RBS's charge over the Coroin shares ranked behind two others in favour of two Irish banks, each of which had sold their respective loans and linked security interests to different parties who appeared to be interested in acquiring control of Coroin, namely the Barclay brothers (acting through companies called B Overseas Limited and Ellerman Corporation Limited) and a Malaysian businessman called Mr. Jho Low (acting through a company known as JQ2 Limited).
Two related agreements were entered into on 23 September 2011: the first was between B Overseas Limited, JQ2 Limited and Aabar; and the second was between Aabar and Edgeworth and Mr. Quinlan. The deal encapsulated in these agreements had four essential parts: (i) JQ2 Limited sold the debt and security which it held over Mr. Quinlan's Coroin shares to Ellerman for £49.1 million; (ii) Aabar and Edgeworth released their security over Mr. Quinlan's Coroin shares in exchange for a payment of £9.4 million in cash from Ellerman; (iii) Ellerman released any and all claims which it might have in relation to Ramblas; and (iv) Mr. Quinlan was prevailed upon to enter into a conditional sale of his shares in Ramblas to Aabar and Edgeworth.
The fourth element – the sale of Mr. Quinlan's shares in Ramblas — was achieved by a "Deed of Sale and Adherence" under which, subject to a condition precedent, Mr. Quinlan agreed to sell his nine shares in Ramblas (defined in the Deed as "the Shares") to Aabar (which bought four shares) and to Edgeworth (which bought the remaining five), for a total consideration of €1. Clause 3 of that agreement was as follows,
"3.1 The agreement to sell and purchase the Shares … is conditional upon the transfer of the Shares to [Aabar and Edgeworth] becoming permissible pursuant to article 11 … of the [Articles of Association of Ramblas] (the "Condition Precedent").
3.2 [Mr. Quinlan] shall use reasonable endeavours to ensure that the Condition Precedent is satisfied…
3.3 If a shareholder of [Ramblas] seeks to...
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