The provisional liquidators of a UK-based company have succeeded in blocking parallel proceedings in Luxembourg after arguing that the same would result in duplication of effort and a waste of time and resources that would ultimately be of no benefit to creditors.
The provisional liquidators were appointed after satisfying a judge in the context of winding up proceedings that the company’s main centre of interests was in England. The public prosecutor of Luxembourg had notice of that order but had nevertheless applied to launch liquidation proceedings in Luxembourg.
The High Court accepted the provisional liquidators’ plea that their appointment had had the effect of automatically staying any subsequent liquidation proceedings against the company anywhere within the European Union by operation of Section 130(2) of the Insolvency Act 1986.
The Luxembourg proceedings were a violation of that statutory moratorium in that the stay could only be lifted with the permission of the Court and no such application had been made by the public prosecutor. The provisional liquidators had additionally argued that the parallel proceedings would unnecessarily complicate matters and create a potential conflict between their role and that of a Luxembourg liquidator.