Re Television Trade Rentals Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Lawrence Collins |
| Judgment Date | 19 February 2002 |
| Neutral Citation | [2002] EWHC 211 (Ch) |
| Date | 19 February 2002 |
| Court | Chancery Division |
| Docket Number | 0636 of 2002 |
[2002] EWHC 211 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION COMPANIES COURT
Royal Courts of Justice
Strand
London WC2A 2LL
The Honourable Mr Justice Lawrence Collins
0636 of 2002
0635 of 2002
Mr David Marks (instructed by Eversheds) for the provisional liquidators
Approved by the Court for handing down
Hearing: February 7, 2002
I direct that pursuant to CPR 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic
(Mr Justice Lawrence Collins)
Mr Justice Lawrence Collins
I Background
These are applications by the joint provisional liquidators of two Isle of Man companies, Television Trade Rentals Ltd ("TTR1") and TTR Ltd ("TTR2") for orders that the English court provide assistance to the High Court of Justice, Isle of Man, Chancery Division pursuant to a letter of request made by the Isle of Man court on January 24, 2002. The Isle of Man court has asked the English court to direct and declare that the provisions of Part I of the Insolvency Act 1986 ("the 1986 Act") relating to company voluntary arrangements should apply to the companies pursuant to the provisions of section 426 of the 1986 Act. This appears to be the first case in which a request has been made to extend Part I of the 1986 Act to oversea companies.
Each of the companies carried on business in England, but neither was registered as an oversea company. TTR1 was incorporated on December 6, 1994 in the Isle of Man and TTR2 was incorporated there on December 14, 2000. Each was associated with a company called Coin TV Ltd. ("Coin TV"), an English company, which hired equipment such as refrigerators, televisions, and video recorders to customers, who entered into term agreements for their hire and sometimes for their purchase. The hire was paid by putting money into a meter attached to the back of the equipment. TTR1, and subsequently TTR2, purchased equipment and rented it to Coin TV. The majority of equipment hired to customers was financed by ING Lease (UK) Ltd ("ING") and Hitachi Credit (UK) plc ("Hitachi"). The affairs of the three companies were heavily, and perhaps inextricably, intertwined.
Winding up petitions were presented against TTR1 and TTR2 by ING and Hitachi on June 7, 2001, and joint provisional liquidators (partners in the firm of Messrs Baker Tilly (Birmingham)) were appointed on June 13 and July 24, 2001 respectively. The Companies Court in England requested the Isle of Man court to recognise and give effect to the appointments of the joint provisional liquidators, and the Isle of Man did so by orders of June 14 and August 22, 2001 respectively. On July 24 this court authorised the provisional liquidators to enter into a transfer agreement by which the companies transferred to Coin TV the whole of their businesses and assets. A winding up petition against Coin TV is also pending, and there is no prospect of there being any viable return should the companies be put into compulsory liquidation.
The purpose of the transfer was to allow for the business to be carried on without the provisional liquidators having to be concerned as to which company's assets were being used in the trading and as to which company was entitled to the income stream. The provisional liquidators believe that it is not possible to differentiate the ownership of the assets as between the three companies. The vast majority of the hire contracts entered into with the ultimate customers were charged and/or assigned to either ING or Hitachi who hold security over both the income stream and over the equipment. The realisable value of the equipment is not significant, and the true value of the underlying assets lies in their ability to generate an income stream as long as the income is collected and the customers are provided with an adequate level of service.
In December 2001 the provisional liquidators requested the directors of the companies to propose CVAs. The proposals for CVAs were made on December 21, 2001. The proposals were that ING and Peoples Choice Rentals Ltd. would acquire the businesses and assets of all three companies in consideration of their making a payment of £50,000 to the supervisors of a voluntary arrangement. The creditors would accept the payments in full settlement of their claims, which would provide a dividend to preferential creditors of 100p in the pound and a dividend of to unsecured creditors of 22p in the pound depending upon the ultimate level of claims from creditors.
At the meetings of members and creditors on January 18, 2002 the proposal was unanimously accepted by all members of the companies and was unanimously accepted by all creditors present in person or by proxy and voting at the meetings.
The trade creditors were about £200,000. All of the creditors of TTR1 and TTR2 (apart from four) are based in England. Of the four creditors not based in England two are directors of one or other of the companies who proposed the CVAs for all three companies. The joint provisional liquidators were proposed as joint supervisors of the arrangements. Mr Rendle, one of the provisional joint liquidators and proposed supervisors, has reported that the approval of the proposal would benefit creditors of the companies because preferential creditors would be paid in full and a dividend of approximately 0.22p in the pound paid to unsecured creditors, and it was fair and not unreasonable for the members because there was no reasonable prospect of a return to the existing members.
II Letter of request and application under section 426 of the Insolvency Act 1986
Company voluntary arrangements are not known under the law of the Isle of Man. The Isle of Man court issued the following letter of request on January 24, 2002:
"THIS COURT HEREBY REQUESTS THE HIGH COURT OF JUSTICE IN ENGLAND PURSUANT TO THE PROVISIONS OF SECTION 426 OF THE INSOLVENCY ACT OF PARLIAMENT TO ASSIST THIS COURT BY DIRECTING AND/OR DECLARING THAT:—
1. The provisions of Part I of the Insolvency Act 1986 of Parliament and the relevant rules under the Insolvency Rules of Parliament be extended and applied to Television Trade Rentals Limited and T. T.R. Limited, both being companies incorporated and formed under the laws of the Isle of Man, with effect from the 18 th day of January 2002;
2. The said Court give such further assistance or other relief which to it may seem just and convenient."
The application is made under section 426 because it is uncertain whether, without an order under section 426, Part I of the 1986 Act is capable of being applied to oversea companies: see 1986 Act, s. 251 in conjunction with Companies Act 1985, s. 735(1) and (4) and contrast Re International Bulk Commodities Ltd [1993] Ch 77 (a decision on administrative receivers) with ...
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