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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

01 MAY 2012

Re Phoenix Kapitaldienst GMBH; Schmitt v Deichmann and Others [2012] EWHC 62 (Ch); [2012] BPIR 392

(Chancery Division, Proudman J, 23 January 2012)

On 23 May 2008, Mr Registrar Jaques by order recognised S as the insolvency administrator under German Law of a company and ordered that S be empowered to exercise all powers in that capacity under English law. It was alleged that the company had operated a fraudulent Ponzi scheme. S issued proceedings against D under s 423 of the Insolvency Act 1986 to recover sums that they had been paid by the company. D appealed the recognition order. Proudman J dismissed the appeal. The authorities established (i) there was power to use the common law to recognise and assist an administrator appointed overseas; (ii) assistance included doing whatever the English court could have done in the case of a domestic insolvency; (iii) bankruptcy proceedings were collective proceedings for the enforcement (not establishment) of rights for the benefit of all creditors, even when those proceedings included proceedings to set aside antecedent transactions; (iv) proceedings to set aside antecedent transactions were central to the purpose of the insolvency. It would be perverse to refuse relief on discretionary grounds in circumstances where recoveries had been made in more than 20 other major jurisdictions of proceeds of an alleged fraud in the context of a formal insolvency. There was no prejudice to creditors resident in England.

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