An Isle of Man company can be the subject of an administration order under English insolvency law where the Manx Court makes a letter of request to the English High Court.

In Capita Asset Services (London) Limited and Gulldale Limited (9 January 2014) the Isle of Man High Court approved the issue of a formal letter of request to the High Court in England in connection with a company incorporated in the Isle of Man. In assessing whether it was appropriate to issue the letter of request the Manx Court considered all of the circumstances of the case including the interests of the claimant, the defendant, the creditors and the public interest.

The defendant company had its main interest in the Isle of Man but had significant connections with England. It owned leasehold interests in London, together with two English companies which were legal owners of properties. The structure had been financed by lending with security granted by the defendant but the loan was in default and receivers in England had been appointed over the principal assets of the defendant and administrators had been appointed in England over the English companies.

His Honour Deemster Doyle considered the claimant's request that the Manx Court issue a letter to the High Court in England requesting the High Court to place Gulldale Limited, a Manx company, into administration under the laws of England and Wales. Citing English and Jersey case law Deemster Doyle noted that the issue of such a letter of request was an exercise of discretion and considered the interests of the creditors, the debtor and the public interest. In particular he noted that Deputy Bailiff Bailhache in Bank of Scotland Plc and the Governors and Company of the Bank of Ireland in respect of REO (Power Station) Limited and Others [2011] JRC 232A had also referred to the relevant factor of "the interests of the Island in terms of its reputation outside these shores". The Deputy Bailiff had regard "at the edges of our discretion, to the fact that a major insolvency of a Jersey company, causing extensive damage to creditors and debtors alike is not in the best interests of the Island, and this can operate as an additional reason to exercise the discretion to issue a letter of request."

The Isle of Man High Court noted English counsel's opinion that if a letter of request was issued the English Court would likely consider it to be an appropriate case to make an administration order. Counsel's opinion confirmed the English High Court has no power, in the absence of a letter of request, to make an administration order against a company incorporated in and with its centre of main interests in the Isle of Man. Under Manx law the main options were the appointment of receivers or liquidators as the Isle of Man does not have insolvency administrators under its company law.

In granting the letter of request Deemster Doyle stated that he could see the real practical advantages in proceeding via the English administration route. He noted that Manx law, like Jersey law, did not make provision for the flexibility offered by the English administration process and he hoped that the issuing of a letter of request would facilitate the most efficient and effective administration of the defendant's assets in the best interests of all concerned.

John T Aycock

Joint Managing Director

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