Cross-border rescue and recovery disputes: The court’s approach

Cross-border rescue and recovery disputes: The court’s approach

The commercial lawyers at Bahamas law firm ParrisWhittaker provide expert litigation representation to businesses: we frequently advise on commercial restructuring and insolvency cases. 

A recent ruling of the High Court in London illustrates how the courts are approaching cross-border rescue and recovery disputes where a company has connections with England and Wales.  The ruling also concerned the issue of ‘fairness’

What is the law?

The legal system in The Bahamas is based on English common law, supplemented by local laws.   The new insolvency regime in The Bahamas is set out in the Companies (Winding Up Amendment Act) 2011.  However, this UK ruling is important for insolvency lawyers and commercial clients in The Bahamas as to how the courts will approach such issues when the company has a UK connection.

What was this case about?

The court was concerned to protect the interests of the various classes of creditor in a case where an international group of companies based in Europe and Asia were experiencing financial difficulties.  To turn its financial affairs around, the group had to restructure the funding arrangements of two of the group companies (one based in England and the other in Singapore) with both their bankers and creditors.   The proposed scheme of arrangement required various creditors to agree to a variation of their existing contractual rights in order to make it work.  All bar one creditor supported the scheme.

The court had to decide whether the scheme of arrangement between the company and its creditors was to be approved, and was concerned to protect the interests of the various classes of creditor. One of the issues was the fact that various legal jurisdictions potentially involved.

Also at issue was whether the test of fairness for sanctioning a scheme of arrangement had been satisfied.  The Court accepted the Group’s submissions that applying the test in authority, an intelligent and honest man, a member of the class concerned and acting in respect of his interest, would find the scheme to be fair - creditors would have access to the same rights under the scheme, and would be worse off if the scheme was not implemented.

High Court approved the scheme, effectively taking a highly constructive approach to international rescue and recovery processes where a company has a connection with England and Wales.

How can we help?

The commercial, insolvency and corporate restructuring lawyers at ParrisWhittaker in The Bahamas are experienced in advising and assisting business clients in financial difficulties.  We are renown for our strategic response to a business’s difficult financial circumstances and have years of successful experience to help our clients effectively.

Contact us now.