Britain a “bankruptcy brothel” says Wind Hellas pre-pack creditor
The restructuring of Wind Hellas, a Greek telecoms company, has prompted the Sunday Times to repeat a claim by Bertrand des Pallières, of hedge fund SPQR Capital, that Britain is becoming a bankruptcy brothel.
In this high profile example of aggrieved creditors misconstruing that it is the procedure involved rather than the underlying business failure that causes loss in insolvencies, jurisdiction shopping and bankruptcy tourism have been joined by a more colourful phrase!
Not only was the Centre of Main Interests (COMI) of the relevant Wind Hellas company moved to England from Luxembourg (ie 1300 miles away from Greece rather than 1000), but it was then put through a pre-pack administration (with all the unfortunate connotations that unfortunate phrase has come to bear).
The administrators will have acted in the best interests of the creditors generally, otherwise their regulator and the courts would have been active, especially with aggrieved creditors on the scene, yet still the Sunday Times and the Mail on Sunday chose to suggest that the losses were somehow linked to the insolvency mechanism used.
This may be something of a storm in a teacup in the Wind Hellas administration, but it is regrettable that such shrieking hinders genuine business reconstruction by casting doubt on the flexible, highly-regulated UK insolvency regime, which operates subject to the scrutiny of a highly regarded and equitable court system.
Of course, a Luxembourg insolvency might have suited a particular aggrieved creditor, but the well-established COMI principle allows companies to move between jurisdictions. It’s the debtor’s choice.
In cross-border cases there will often be those who would have preferred a different insolvency regime, but while the UK continues to offer the most varied and flexible system and the experienced and regulated practitioners to make best use of it, debtors – and creditors generally – will benefit.
Date: 8th March, 2010
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