Aug 2017
Three Jersey incorporated companies owned shopping centres in England and each had granted qualifying floating charges to its main lender, Nationwide Building Society (NBS). NBS entered into arrangements with the respondents to share the funding risk with the respondents and to sell the loan. The three companies challenged this sale on the grounds that each of the companies had a right of pre-emption to buy in the loan at market value. Proceedings for declarations were commenced but in the meantime the loans had fallen due for re-payment and at the request of the assignee, NBS had issued demands for repayment and then appointed administrators to each of the companies.
The Court first considered whether the companies had their centre of main interests (COMI) in the United Kingdom. Despite evidence that board meetings were held in Jersey, the Court followed the decision in Northsea Base Investments [2015] in looking for objective factors as to the locus of management which would be visible to third parties.
On that basis the Court placed reliance upon the fact that all negotiations with NBS leading to the grant of the loan facilities had been carried out by persons resident in England and that the management of the retail centres was carried out by companies incorporated in England.
On the application under paragraph 81, the Court noted that although in order to hear a creditor's application there had to be an allegation of improper motive, it nevertheless held that the Court would have an intact discretion to consider other factors. The most important factor was to recognise that if the statutory purpose of the administrations were still capable of being achieved, the Court should not readily interfere to cancel the administration. In these cases, they found that there was no improper motive but in any case the Court would not have interfered.
For further advice contact Nigel Cook, either by email [email protected] or by phone on 01306 502294.
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