BACKGROUND
Coin Co International PLC (Administrators Appointed) (Coin Co) was a company incorporated in the UK which conducted a cash services business in the UK and a global currency exchange business in various countries, including Australia.
In 2014, administrators were appointed to Coin Co in the UK by court order. The administrators decided to wind up Coin Co's operations in Australia. Accordingly, the administrators sought orders in the Federal Court that the UK administration be recognised as a 'foreign main proceeding' under the Cross-Border Insolvency Act 2008 (Cth) (CBI Act) and the realisation of all of Coin Co's assets in Australia be entrusted to the Australian insolvency practitioners appointed by the UK administrators (Foreign Representatives).
The administrators considered that appointing the Foreign Representatives would be in the best interests of Coin Co's creditors, as it was more cost effective for the assets of Coin Co to be sold in Australia.
DECISION
The Court confirmed that the aims of the CBI Act are to ensure co-operation between courts and authorities involved in cross-border insolvency matters and provide a fair and efficient administration of cross-border insolvencies, so that the interests of creditors and debtors are protected.
The CBI Act applies where assistance is sought in Australia by a foreign court or representative in connection with a foreign proceeding, in which the assets and affairs of the debtor are subject to control or supervision by the court for the purposes of reorganisation or liquidation.
Foster J went on to make orders that:
- The UK administration was a 'foreign main proceeding' under the CBI Act - meaning that it was a proceeding taking place in the jurisdiction where the debtor has its 'Centre of Main Interests' (COMI);
- The UK was Coin Co's COMI - on the basis that the majority of Coin Co's operations, employees, creditors and assets were based there; and
- The Foreign Representatives would have the same powers as if they had been appointed as liquidators of Coin Co under the Corporations Act 2001 (Cth).
The effect of those orders was that:
- All actions or proceedings in relation to Coin Co's assets, rights, obligations or liabilities in Australia were stayed.
- Execution against Coin Co's assets in Australia were stayed; and
- The right to deal with or dispose of any of Coin Co's assets in Australia were suspended.
COMMENT
In today's global environment companies are increasingly operating across jurisdictions. This decision is a good reminder of how the CBI Act can work to ensure the cost-effective and efficient administration of a cross-border insolvency.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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