Assurances made abroad in an international administration

On 9 June 2006, the High Court gave directions allowing Administrators of a number of related companies incorporated and previously carrying on business in several European jurisdictions, to respect local provisions of law in the relevant jurisdictions. This will be of interest to insolvency practitioners and bank creditors because the Administrators were permitted to respect the law of the relevant jurisdictions rather than only English law when making distributions.

The case is interesting because it demonstrates how the court was able to be flexible and support the Administrators’ strategy which had resulted in a better outcome for creditors. However, the outcome could have been very different had the Act specifically prohibited the conduct the subject-matter of the assurances. Therefore, insolvency practitioners will still need to ensure that any proposal is not inconsistent with the provisions of the Act.