Christian Van Buggenhout and Ilse Van de Mierop, acting as liquidators in the insolvency of Grontimmo SA v Banque Internationale à Luxembourg SA
(CJEU, 19 September 2013)
This is a decision of the Court of Justice of the European Union which concerns Article 24 of the EC Regulation on Insolvency Proceedings 1346/2000. That article provides that ‘(1) where an obligation has been honoured in a Member State for the benefit of a debtor who is subject to insolvency proceeding opened in another Member State, when it should have been honoured for the benefit of the liquidator in those proceedings, the person honouring the obligation shall be deemed to have discharged it if he was unaware of the opening of the proceedings.' Article 24(2) contains presumptions dependent on whether the decision opening the proceedings has been published in the Public Registers of the first-mentioned state pursuant to Article 21.
Messrs Van Buggenout and Van de Mierop are the liquidators of Grontimmo SA, which was a property development company with its registered office in Antwerp, Belgium. On 4 July 2006, the Belgian Tribunal de Commerce declared Grontimmo to be insolvent. The application had been made on 11 May 2006. According to Belgian law, the insolvency took effect at 24.00 on the 4th. The decision was published in the ‘Moniteur Belge' (an equivalent of the London Gazette) on 14 July 2006.
Banque Internationale à Luxembourg opened two bank accounts for Grontimmo on 31 May 2006 and 22 June 2006. Cheques in favour of Grontimmo in the sum of €1.4m dated 22 and 24 May 2006 drawn by a debtor were paid into the accounts. On 2 June 2006 Grontimmo's directors requested the bank to issue a cheque drawn on one of the account in favour of a third party Panamean company (Kostner). That order was executed on 5 July 2006. The liquidators thereafter sued the bank seeking recovery of €1.4m.
The question for decision by the CJEU was whether ‘an obligation... honoured... for the benefit of the debtor...' in Article 24(1) covers payments to a debtor, or payments by a debtor. After reviewing the different language versions of the relevant recital of the Regulation (recital 30) and of Article 24(1), the CJEU concluded that Article 24(1) applies to payments to the debtor. It was irrelevant that the payment had been made on behalf of Grontimo by the Bank in this case since Grontimmo was not the recipient of the payment. Whether the Bank was liable to return the payment of €1.4m was a matter governed by the applicable local law, and not by Article 24(1).
"BPIR is an excellent series, of interest to both corporate and personal insolvency lawyers,...