Pending petition—considering applications to adjourn petitions for bankruptcy

Pending petition—considering applications to adjourn petitions for bankruptcy

What was the registrar’s consideration of a second adjournment of a petition, pending the outcome of a liquidation process in Aabar Block SARL v Maud? John Alderton, partner and Jon Chesman, associate, at Squire Patton Boggs who acted for the respondent, examine the details.

Original news

Aabar Block SARL an another v Maud [2015] EWHC 3681 (Ch), [2015] All ER (D) 233 (Dec)

The Bankruptcy Court granted a debtor’s application for a second adjournment to the hearing of a petition for him to be adjudged bankrupt where an immediate bankruptcy order would not—on the balance of probabilities—benefit the general unsecured creditors at the present point in time. Nor would it in circumstances where a liquidation plan in Spanish proceedings could result in the debtor being able to meet all creditor claims and where it was held that the petitioners had had an ulterior object in pursuing the petition.

What was the background to the application?

This was the second hearing of the bankruptcy petition presented by Aabar Block SARL and Edgeworth Capital (Luxembourg) SARL against Glenn Maud, a commercial property investor. Mr Maud’s sole asset—in the context of the size of the petition debt—is his interest in a group of companies that holds a significant piece of commercial real estate in Spain (Santander’s finance city in Madrid which is conservatively valued at €3bn). The group entered into Spanish insolvency proceedings and the court-supervised process of liquidating or refinancing the group’s assets was underway.

At the first hearing of the petition on 7 July 2015, Mr Maud successfully applied to adjourn the petition, pending the outcome of the liquidation process in Spain. Mr Maud argued that the liquidation process should be allowed to run its course prior to any bankruptcy order being made. He argued that, in the event that the group was successfully refinanced, he stood to realise his equity in the real estate asset which would enable him to repay all of his creditors in full. He also argued that, in pursuing his bankruptcy, the petitioning creditors were seeking to obtain the real estate asset at a discount by taking advantage of pre-emption provisions in the finance structure of the group. Mr Maud had previously unsuccessfully applied to set aside the statutory demand that underlies the petition on the basis that the petitioning creditors were bringing it for a collateral purpose.

At the second hearing, Mr Maud made a further application to adjourn the petition. The application was opposed by the petitioning creditors, who sought an immediate bankruptcy order.

What were the legal issues the registrar had to decide in this app

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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.