No Recognition Of Solvent "Foreign Proceedings" In The UK

The English court has held that solvent proceedings cannot be recognised under the Cross-Border Insolvency Regulations 2006 (“CBIR”) (which implement the UNCITRAL Model Law for Cross-Border Insolvency in the UK), in the case of Sturgeon Central Asia Balanced Fund Ltd.

Impact

• The judgment restricts the nature of “foreign proceedings” capable of recognition under the CBIR — solvent debtors/proceedings intended to distribute a surplus to shareholders will not qualify.
• The judgment raises the question of whether the English court will have to make an investigation into insolvency when considering future applications for recognition of foreign proceedings. The judge in Sturgeon considered it would not, stating that the vast majority of cases will be obvious.