The Bermuda Court of Appeal yesterday handed down its eagerly
awaited decision in the appeal against the decision in In the
matter of Saad Investments Company Limited [2013] SC (Bda) 28 Com
(15 April 2013) in which the Chief Justice reaffirmed Bermuda's
common law jurisdiction to assist foreign liquidators in accordance
with the principles laid down in Cambridge Gas Transportation Corp
v Official Committee of Unsecured Creditors of Navigator Holdings
plc [2006] UKPC 26. This is an important development for
those concerned with the international recognition and enforcement
of liquidation proceedings since Bermuda has no statutory framework
of international co-operation in the field of insolvency, unlike
the UK and the US.
The decision before the Court concerned the ability of foreign
appointed liquidators to obtain orders under Bermuda statutory
provisions requiring information from auditors in respect of two
related Cayman Islands companies. One of those, Saad
Investments Company Limited, was in ancillary liquidation in
Bermuda, and the other, Singularis Holdings Ltd, was not and had
only tenuous links to Bermuda. The Chief Justice in the first
instance decision held that, at the very least, the Court has power
to assist foreign liquidators by deploying those remedies generally
consistent with those to which a locally appointed liquidator would
be entitled. This would be the case even if the legislation itself
could not apply to the foreign liquidation and could even extend to
providing the remedies available under the local legislation.
The fundamental issue on appeal was whether there is such a power
to apply local legislation where it would not otherwise apply to
the insolvency proceeding. The Court of Appeal unanimously held
that there was not. Given the tenuous connection between
Singularis Holdings Ltd and Bermuda, the Court found no basis for
providing statutory assistance to its liquidators (by analogy or
otherwise) in circumstances where equivalent assistance could not
have been obtained in the liquidator's home jurisdiction.
This would have allowed the common law to override primary
legislation and offend the international law principle of
comity.
One of the justices, Auld J.A., went further than the rest of the
Court to conclude that he would have allowed an appeal against the
orders made in the liquidation of Saad Investments Company Limited
too; it was not an "overseas company" in respect of which
the Bermuda statutory power could apply. In differing with his
fellow justices, he held that the auditors were entitled to rely on
that ground despite there being no challenge to the making of the
ancillary liquidation order.
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