European Union Companies. of Regulation (EC) No 1346-2000 should be interpreted as meaning that an action for damages for unfair competition by which the assignee of part of the business acquired in the course of insolvency proceedings was accused of misrepresenting itself as being the exclusive distributor of articles manufactured by the debtor, did not fall within the jurisdiction of the court which had opened the insolvency proceedings. The Court of Justice of the European Union so held in a preliminary ruling in proceedings concerning an action for unfair competition brought by the respondent company against the applicant companies.
Insolvency Administration. In this rare and exceptional case, a proposal by joint administrators to appoint a director to a company already in administration (Lehman Brothers EuropeLtd), in order to distribute surplus funds to its sole member (Lehman Brothers Holdingsplc), as opposed to a creditor, was held to be legally permissible, as well as pragmatic and beneficial.
Costs Payment into court. When considering whether the ability of a third party to provide funds could be taken into account in assessing the likelihood that a company could make a payment into court, the question had to be whether the company could raise the money and not whether the relevant shareholder could raise the money. The appropriate criterion to be applied was whether the appellant company had established on the balance of probabilities that no such funds would be made available to it, whether by its owner or by some other closely associated person, as would enable it to satisfy the requested condition. Accordingly, the Supreme Court allowed the appellant company's appeal against a finding that its appeal against an earlier judgment would be dismissed, on the grounds that it could not make the required payment into court.
Company Director. The settlement agreement entered by the first applicant company and the respondent, governing certain claims or potential claims by each against the other, did not release the respondent from his obligations to the company in his capacity as a director. The Chancery Division held that the agreement released the respondent from claims connected with or arising out of his employment and not connected with or arising out of his holding an office.
Land registration Rectification of register. The alteration of the register to reflect the setting aside of a discharge of a charge constituted bringing the register up to date, making it unnecessary for the claimant to establish that the alteration had not affected the defendants' title to the property, that they by fraud or lack of proper care had caused or substantially contributed to the mistake, or that it would have been unjust not to make the alteration. Accordingly, the Court of Appeal, Civil Division, partially allowed the claimant's appeal.
*Re Lemos; Leeds and another (in their capacity as the joint trustees in bankruptcy of the estate of Lemos) v Lemos and others
Bankruptcy Production of documents. The Crescent Farm principle (that legal professional privilege of a predecessor in title enured to the benefit of his successor) had no application in the case of the passing of property to a trustee in bankruptcy. If the judge in Shlosberg v Avonwick Holdings Ltd had taken the view that privilege passed to a trustee in bankruptcy in respect of asset documents, then that decision had effectively been overruled by the later decision of the Court of Appeal in that case, and, insofar Re Konigsberg had held that view concerning the application Crescent Farm principle, it had been wrongly decided. Further privilege was a fundamental human right and the court had no jurisdiction to direct a bankrupt to waive privilege in any documents. So held the Chancery Division in dismissing, for the most part, an application by the former trustees in the bankruptcy of the first respondent (Mr L) for directions concerning the use of documents held by solicitors who had acted for Mr L in other proceeding, and for an order, pursuant to of the Insolvency Act 1986, requiring them to deliver up any further documents in their possession relating to his affairs.
Insolvency Administration. The Companies Court granted the administrators of 18 Nortel group companies orders giving directions to the administrators to inform potential claimants that any expense claims, which had not yet been made, had to be notified to the administratorson a demand form on, or before, a specified date. The court also granted an order authorising the administrators to distribute the assets of two of the companies in the group to their unsecured creditors directly, rather than by promoting a company voluntary arrangement for that purpose. The court held that it had jurisdiction to make the orders sought and that they properly balanced the need to protect the interests of persons who might have expense claims, which had yet to be asserted, against the need to minimise any further delay to the conclusion of the administrations, and to facilitate the distribution of the companies' assets to their unsecured creditors.
*The Joint Administrators of LB Holdings Intermediate 2 Ltd v The Joint Administrators of Lehman Brothers International (Europe) and others; The Joint Administrators of Lehman Brothers Ltd v Lehman Brothers International (Europe) (in administration) and others; Lehman Brothers Holdings Inc v The Joint Administrators of Lehman Brothers International (Europe) and others
Insolvency issues decided arising out of collapse of Lehman Brothers group of companies . The Supreme Court decided a number of points of insolvency law, which arose out of the collapse of the Lehman Brothers group of companies in 2008, including that, both statutory interest and non-provable liabilities ranked over subordinated debt in the distribution priorities of an insolvency.
Company Insolvency. The Companies Court ruled on a preliminary issue concerning limitation, which arose in a claim, under s212 of the which had been brought by the applicant joint liquidators of two Jersey companies in liquidation in England. The claim alleged misfeasance and breach of directors' duties by the respondents in respect of the various payments allegedly made from the companies' bank accounts. The court held that the duty owed, under art74 of the Companies (Jersey) Law 1991, was a fiduciary duty in the strict sense, and not tortious in nature. Accordingly, the prescriptive period for both causes of action, under art74, was ten years, being the default period applicable to personal claims under Jersey law, and not three years, being the relevant period applicable to breach of trust and to tort under Jersey law, as the first to the fifth respondents had contended. Accordingly, the claims were not time-barred.
Bankruptcy Discharge. The Chancery Division allowed, on one ground only, a bankrupt's (H's) appeal against a district judge's order, suspending her discharge from bankruptcy until her trustee in bankruptcy confirmed to the court that H had complied with her duties. The court held, among other things, that a suspension of the discharge until the trustee confirmed to the court that the bankrupt had complied with his duties and obligations, or until the court otherwise ordered, satisfied the statutory requirement that the suspension be until the fulfilment of a specified condition. Accordingly, such an order was not always wrong in principle. However, the court held that, in the present case, the district judge's decision to impose an order in the form that he had was flawed for the failure to take into account the range of orders that could have been made, under s279(3) of the and for the failure to consider whether H's failings had really justified an order in that form. The order was set aside.