Court ruling could herald universal insolvency approach
The Supreme Court will hear arguments on whether foreign court rulings in insolvency matters can be enforced in England and Wales
THIS WEEK, the Supreme Court will hear arguments on whether foreign court rulings in insolvency matters can be enforced in England and Wales in a case that could herald a move towards a universal approach to cross-border insolvency cases.
The first case involves US bankruptcy judgments seeking recovery of preferential payments to debtors in England from a US Ponzi scheme in which they were complicit.
The proceedings were brought in the US Bankruptcy Court in New York by English receivers David Rubin & Partners, who placed the Ponzi scheme into Chapter 11 in 2005.
The Supreme Court will also rule on whether the liquidator of insolvent Australian reinsurance company New Cap Re can enforce in England against Lloyds Syndicates an insolvency judgment obtained in an Australian Court for the clawback of money paid preferentially to the syndicates.
NewCap Re and Rubin won in the court of Appeal in separate cases, the NewCap success was based on the Rubin judgment. The Supreme Court appeals are being heard together.
If the Supreme Court upholds Rubin’s victory, it will allow foreign court rulings in core insolvency matters to be enforced in England and Wales as a matter of common law.
John Verrill, insolvency and financial restructuring partner in the London office of Chadbourne & Parke, who is acting for David Rubin & Partners, said: “International insolvency practitioners have long held the conviction that there should in practice be one pool of assets in which all creditors share equally, regardless of country or continent of residence.
“It is vitally important in cases such as Lehman and Madoff that courts and practitioners, as far as possible put aside their jurisdictional differences and work together in recovering as much as possible for victims of such financial catastrophes.
“Whether English law remains in a state of arrested development or embraces a principle of assistance suited to the transaction of business in the electronic age is a matter of intense global interest which the Justices have to decide in this case”