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In the matter of BRAC Rent-A-Car International INC (2003)

Summary

EC Regulation on Insolvency Proceedings 1346/2000 gave the courts of a Member State jurisdiction to open insolvency proceedings in relation to a corporate debtor incorporated outside the EC, if the centre of the debtor's main interests was within that Member State.

Facts

Petition for an administration order by and in relation to the subject company ('B'), that had been incorporated in Delaware USA, yet conducted its operations almost entirely in the UK. B had for a long time been registered under the Companies' Acts as an overseas company. Its trading activities were executed through contracts with subsidiaries and franchisees governed by English law. There were judgment creditors, ('C') who had the benefit of an Italian arbitration award in Italy for a sum exceeding £1.1 million, that had been registered as a judgment in England and an interim charging order over B's property. C argued that the court had no jurisdiction to make an administration order, in light of s.8(7) Insolvency Act 1986 implementing Art.3 Regulation on Insolvency Proceedings 1346/2000. The issue before the court was whether, under these provisions, the relevant jurisdiction extended to a company incorporated outside the EC if the centre of its main interests was in a Member State. C contended that the regulation should not be read as having extra-territorial effect outside the EC. B argued that the regulation did allow insolvency proceedings to be opened in relation to a company incorporated outside the EC if the centre of its main interests was in a Member State

Held

(1) According to the literal reading of the regulation, the only test for the application of the regulation in relation to a given debtor was whether the centre of the debtor's main interests was in a relevant Member State, and not where a debtor which was a legal person was incorporated. (2) This was supported by the purposive interpretation. (3) The regulation gave the courts of a Member State jurisdiction to open insolvency proceedings in relation to a corporate debtor incorporated in Delaware, such as B, if the centre of the debtor's main interests was within that Member State, as was the case in this instance.

Administration order made

Chancery Division
Lloyd J
Judgment date
7 February 2003
References

[2003] EWHC (Ch) 128