Charles Fussell & Co LLP succeeds in insolvency jurisdiction battle

Charles Fussell & Co LLP has succeeded in defeating a creditor’s attempt to bankrupt a client in this jurisdiction.

Mr Deputy Registrar Baister handed down judgment today in Porter Capital Corporation v. Masters.  Despite its concerns about some aspects of the evidence, the Court was nevertheless persuaded that the evidence showed that the debtor’s centre of main interests was in Switzerland – and not England and Wales.  The creditor’s bankruptcy petition was therefore dismissed.

The debtor produced a considerable amount of evidence showing how his personal life was based in Switzerland.  The creditor sought to argue that (1) his involvement with a company incorporated in England and Wales and (2) his receipt, through an arrangement with his wife, of income from that company was sufficient to establish English jurisdiction because he was “exercising an independent business or professional activity” (in the words of article 3(1) of the EU Regulation on Insolvency Proceedings 2015 (Regulation (EU) 2015/848)).  The Regulation is also the subject of an authoritative commentary known as the Virgós-Schmit report.

The Court rejected the argument.  Taken to its logical conclusion, this would ignore the well-established concept of the separate legal personality of companies.  The argument did not sit with paragraph 75 of the Virgós-Schmit report and was also contrary to previous authorities.

As is clear, most of the legal argument centred around EU legislation and guidance.  It remains to be seen what rules (if any) will govern such disputes in the future.

Simon Winter acted for the debtor, assisted by Catherine Stockler.  Charles Fussell & Co LLP instructed Adam Al-Attar of South Square Chambers as Counsel.