Before : |
J. A. Clyde-Smith, Commissioner, and Jurats Morgan and Milner. |
Between |
(1) Maltese Holdings Limited |
Representors |
And |
(2) Zollinger Investments Limited |
|
And
|
(1) Astro Properties Limited (2) Breifne O'Brien (3) IBRC Asset Finance PLC (4) Danier Maher (5) Louis Dowley (6) Robert Dowley (7) David Bell (8) Paul Bell (9) David O'Reilly (10) Evan Newell (11) Barty O'Brien (Martin O'Brien) (12) Bernard Lambilliotte |
Respondents
|
IN THE MATTER OF THE REPRESENTATION OF MALTESE HOLDINGS LIMITED AND ZOLLINGER INVESTMENTS LIMITED
AND IN THE MATTER OF ARTICLE 155 OF THE COMPANIES (JERSEY) LAW 1991
Advocate Dr E. R. Moran for the Representors.
judgment
the COMMISSIONER:
1. The background to this matter is set out in the Court's judgment of the 3rd October, 2012, (Representation of Maltese Holdings and Zollinger Investments [2012] JRC 172) and we adopt the same definitions as set out in that judgment. The position has now been reached when the application for the winding-up of Zollinger and Maltese under Article 155(1) of the Companies (Jersey) Law 1991 ("the Companies Law") has the support of all of the convened parties, with the exception of Mr Barty O'Brien who, it is clear, has received written notice of the application and the hearing - indeed Miss Moran has taken the trouble of actually phoning him but he expressed himself as being too busy to deal with the matter. He has certainly raised no objection to the orders that are being sought today. Ms Nagle, who it is thought might have a personal interest as a creditor of Mr O'Brien, has not availed herself of the opportunity given to her by the Court to apply to be made a party.
2. It remains of course a discretionary remedy. Miss Moran has drawn to our attention the relevant authorities which show that the Court has a broad discretion in the matter. In the case of Jean-v-Murfitt 1996/237 it was held the words "just and equitable" should be given a flexible interpretation (paragraph 45 of the judgment). In the matter of Leveraged Income Fund Limited 2002/209 the court adopted the proposition that the words "just and equitable" are general words and that there is no exhaustive list of situations that may fall within the scope of the words (paragraph 10 of the judgment). In Representation of Poundworld [2009] JRC 042 the court held that the "jurisdiction to order a winding-up under Article 155 is a wide one" (paragraph 15 of the judgment).
3. As she pointed out to us there are a number of reasons why a just and equitable winding up may be appropriate including the loss of the substratum of the company (see for example In the matter of Leveraged Income Fund) a deadlock in the management of the company (see Bisson-v-Barker [2008] JRC 193) or a desire to keep an otherwise insolvent company trading for the benefit of the company's clients and creditors. (See in Poundworld Jersey Limited [2009]).
4. Another reason that has led to the use of the just and equitable jurisdiction which is relevant here is the need for investigation into the company's affairs (see In the matter of Belgravia Financial Services Group Limited [2008] JRC 161). In Centurion Management Services Limited [2009] JRC 227, Centurion was insolvent and the court ordered a just and equitable winding up. The court accepted that a just and equitable winding up was the appropriate way of proceeding for a number of reasons including:-
(i) The need for flexibility;
(ii) The avoidance of conflict with the creditors;
(iii) The need to protect the interests of the investors; and
(iv) The need for the appointment of an appropriately experienced liquidator.
5. In the case of Horizon Investments Limited [2012] JRC 039, Horizon had ceased business save to the extent necessary to transfer its client assets to a third party purchaser. In exercising its jurisdiction under Article 155 the Court took into account, amongst others, the following factors:-
(i) There was a clear public interest in completing the transfer of clients to the third party in an orderly fashion without adverse publicity for the Island's financial services industry;
(ii) It would be in the best interest in all the stakeholders for the process to be overseen by a liquidator who was directly accountable to the Court;
(iii) An Article 155 appointment is preferable to a creditor's winding up given the greater flexibility allowed for and the overriding duty to the Court, especially given the potential for conflicts to arise between the shareholders and creditors.
6. Summarising the authorities, Miss Moran submitted that the following are relevant to a decision to order a just and equitable winding up under Article 155(1):-
(i) The jurisdiction is a wide and flexible one and there is no exhaustive list of the situations that apply;
(ii) Article 155(1) can be used where there is a desire to keep a company trading;
(iii) There is a need to investigate the affairs of the company;
(iv) There are conflicts of interest that are best dealt with by appointing an independent liquidator;
(v) The public interest in protecting the reputation and integrity of Jersey in commercial and financial matters.
7. Miss Moran submitted that a winding up of Maltese and Zollinger pursuant to Article 155(1) is appropriate for the following reasons:-
(i) There is potential for conflict between Astro on the one hand and Maltese and Zollinger on the other given that all three are administered by RBC. The appointment of independent liquidators will resolve this conflict. IBRC had raised the issue of whether it was appropriate to have the same liquidators for Maltese and Zollinger given that Maltese may file a claim in the winding up of Zollinger. This has been addressed by the proposal to appoint one common joint liquidator of both companies but a different joint liquidator for Zollinger and Maltese.
(ii) There are potential knowing receipt or tracing claims from the Irish creditors that need to be investigated. Miss Moran took us to some of the evidence which shows that there is prima facie case in that respect which needs to be looked at. Independent liquidators are best placed to undertake this task particularly in circumstances where there is a potential conflict between the Irish creditors and the ultimate beneficial owner of Astro (Bernard Lambilliotte).
(iii) The liquidators can investigate a potential sale of the assets of Maltese and/or Zollinger. This might or might not include a sale of Maltese's shares in Zollinger to Astro. The appointment of independent liquidators will ensure that there is no suggestion of a sale at undervalue. Furthermore the sale can, if appropriate, be done with the approval of the Court.
(iv) The liquidators can investigate and make any necessary reports to the appropriate authorities.
(v) The appointment of independent liquidators will avoid any suggestion that the potential interests of the Irish creditors have not been adequately addressed by the directors of Maltese and Zollinger thereby protecting the reputation and integrity of Jersey in commercial and financial matters.
(vi) The appointment of independent liquidators has the support of the Viscount, IBRC, Astro and Mr Lambilliotte and all of the convening parties, save for Mr O'Brien who has not objected.
The representors have sensibly taken advice from German lawyers to the effect that the winding up of Zollinger and the appointment of liquidators will not affect the lease of the commercial property per se.
8. We have given careful consideration to the application, and the submission as presented to us, and accept that it is appropriate to exercise our discretion to wind up these two companies and to appoint independent liquidators for the reasons put forward by Miss Moran.
9. The Court has stayed the enforcement of any judgments against Mr O'Brien in this jurisdiction in order to ensure that all creditors of Mr O'Brien of the same rank are treated equally. It is suggested that this should remain in place after the liquidators are appointed so that there is no scramble by the creditors to enforce their judgments while the liquidators consider any tracing or knowing receipt claims.
10. There is an issue as to the jurisdiction of the Court to make such an order in the context of an application by Zollinger and Maltese upon which we have not heard any argument. However, in light of the fact that most of the creditors of Mr O'Brien have been convened and support the status quo being maintained procedurally in this way, we think it is right to continue that order.
11. We therefore grant the application and order that Maltese and Zollinger are hereby wound up pursuant to Article 155(1) of the Companies Law and we appoint Mr Adrian Rabet and Mr Dermot Boylan of Moore Stephens Risk and Recovery Limited as joint liquidators of Maltese and Mr Adrian Rabet and Mr Phillip Sykes of Moore Stephens LLP as joint liquidators of Zollinger, with all the powers as set out in the draft order upon which we have no further points to raise.
Authorities
Representation of Maltese Holdings and Zollinger Investments [2012] JRC 172.
Companies (Jersey) Law 1991.
Jean-v-Murfitt 1996/237.
In the matter of Leveraged Income fund Limited 2002/209.
Representation of Poundworld [2009] JRC 042.
Bisson-v-Barker [2008] JRC 193.
In the matter of Belgravia Financial Services Group Limited [2008] JRC 161.