Croatian company’s application recognised as ‘foreign proceeding’ in UK (Re Agrokor)

Croatian company’s application recognised as ‘foreign proceeding’ in UK (Re Agrokor)

In Re Agrokor DD and in the matter of the Cross-Border Insolvency Regulations 2006 [2017] EWHC 2791 (Ch)[2017] All ER (D) 83 (Nov), the Companies Court had to decide whether to recognise a Croatian extraordinary administration proceeding as a ‘foreign proceeding’ despite, for the first time in an English court, the recognition application being contested by a creditor.

The Companies Court granted a Croatian company’s application for an extraordinary administration proceeding in Croatia to be recognised in Great Britain as a ‘foreign proceeding’, as defined by Article 2(i) of Schedule 1 to the Cross-Border Insolvency Regulations 2006, SI 2006/1030, notwithstanding the objections of the respondent bank, which was a creditor of the applicant.

What was the background to the case and the issues arising within it that were pertinent to insolvency professionals?

The applicant is the largest private company in Croatia. When it encountered financial difficulties, the Croatian Parliament passed the Law on extraordinary administration proceedings in companies of systemic importance for the Republic of Croatia (the Law), which was intended to facilitate the restructuring of the applicant and its subsidiaries and affiliates, and to preserve their businesses as going concerns.Very shortly afterwards, the applicant and several of its controlled and affiliated companies entered into an extraordinary administration proceeding under the Law.

The applicant then initiated proceedings in the High Court in London seeking, under SI 2006/1030, recognition in Great Britain of the extraordinary administration proceeding. The application was opposed by the respondent, a creditor of the applicant.

This was the first time that a recognition application had been opposed in the English courts. However, the respondent’s challenge was unsuccessful and the Companies Court granted recognition of the extraordinary administration proceeding.

What were the main legal arguments raised?

The respondent opposed the recognition application on two main grounds:

  • the extraordinary administration proceeding was not a ‘foreign proceeding’ within the meaning of SI 2006/1030, Sch 1art 2(i)
  • even if it were a ‘foreign proceeding’, it would be ‘manifestly contrary’ to English public policy, within the meaning of SI 2006/1030, Sch 1art 6

The respondent submitted five arguments why the extraordinary administration proceeding was not a ‘foreign proceeding’:

  • it was not undertaken pursuant to a ‘law relating to insolvency’, within the meaning of SI 2006/1030, Sch 1art 2(i), because, among

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About the author:
Eleanor qualified in 1998 into the insolvency team at ASB law. She became a partner in 2005, and went on to head up the Recovery & Insolvency team. Whilst traditionally specialising mainly in contentious corporate insolvency matters, in recent years she has moved into the non contentious arena, in particular specialising in company administrations.