24 February 2016
The Irish High Court recently, for the first time, recognised and gave effect to a Swiss law insolvency and restructuring process that had been commenced in Switzerland in respect of a Swiss company.
Within the European Union, the recognition of international and cross-border insolvency processes has been harmonised and regulated by the EU Insolvency Regulation for well over a decade. However, neither the EU Insolvency Regulation nor the Recast Insolvency Regulation (that will come into effect in 2017) applies to insolvency processes that are commenced in jurisdictions located outside the EU, such as Switzerland. In such cases, it is necessary for the relevant parties to apply to the High Court for recognition of the foreign process and to rely upon the High Court’s inherent common law jurisdiction to recognise equivalent personal and corporate non-EU insolvency processes.
This particular case involved Valartis Group AG (the ‘Company’), which is the parent company of an international banking and finance group. In November 2015, following an earlier Swiss law provisional restructuring process, the court in Switzerland granted the Company a Swiss law definitive six-month moratorium (the ‘Definitive Moratorium’) and appointed an administrator to the Company for the purpose of facilitating a potential composition or arrangement with its creditors.
The effect of the Definitive Moratorium was to prohibit any enforcement action against the Company by its creditors during its six-month duration and to stay any existing legal proceedings. Such protection is similar to the protection afforded to a company in examinership under Irish law. In addition, the Swiss law insolvency and restructuring process enjoyed other similarities with examinership, including a similar overarching purpose and the appointment of a third party to administer the process.
Due to the Company’s links to Ireland, the Company applied to the High Court in December 2015 to have the ‘Swiss Order’ recognised and given effect under Irish law. Following an application to the High Court that was founded upon the similarities between the Swiss law process and examinership, the High Court recognised the Swiss Order. In particular, the High Court recognised and gave effect to the protection afforded by the Definitive Moratorium to the Company, including the restriction on any creditor issuing any debt recovery proceedings or excising any legal rights against the Company under Irish law.
The decision is an important illustration of the High Court’s jurisdiction to recognise non-EU insolvency and restructuring proceedings. In particular, it also addresses a degree of uncertainty regarding the recognition of Swiss insolvency law matters in Ireland, following the 2012 Supreme Court judgment in the Flightlease (Ireland) Limited liquidation.