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Welcome /  Blog /  2017-12-doc5 Extension of administration; what abour Brexit?

2017-12-doc5 Extension of administration; what abour Brexit?

Many of my students have studied the Nortel Network case, including the one decided by the England and Wales High Court of Justice (Ch. Div.) [2009] EWHC 206 (Ch),  in which the joint administrators of Nortel Networks UK Limited and 18 other companies in the Nortel Group of companies sought directions from the court how to handle certain matters with creditors abroad. It was one of the cases that insprired the European law maker to introduce Article 36 EIR 2015 Recast, ending in a result that rather has drifted away from the original typical English undertaking. See my book International Insolvency Law Part II (2017), para. 10836f and onwards. Anyway, over 8 years later, on 14 December 2017, the joint administrators of Nortel Networks UK Limited and the other 18 companies approach the court once more, see England and Wales High Court (Chancery Division) 14 December 2017, [2017] EWHC 3299 (Ch). They wish to extend their terms of office by a period of 12 months, to 13 January 2019. Their terms of office had been extended on four previous occasions, most recently by that same Court on 2 December 2015, by 24 months to 13 January 2018: see High Court of Justice [2015] EWHC 3618 (Ch). The period of extension sought by the administrators is only one year, namely to 13 January 2019. Why an extension for one year only? The High Court continues:
'That is largely because of the uncertainty caused by the fact that on 29 March 2017 HM Government gave notice of the United Kingdom's intention to withdraw from the European Union. That withdrawal is expected to take effect on 29 March 2019. The uncertainty arises because the administrations (and where applicable the CVAs) of the Companies are main proceedings for the purposes of the Regulation (EC) on Insolvency Proceedings 2015 (No 2015/848) (the "Recast Insolvency Regulation"). Pending the completion of any withdrawal agreement between the UK and the European Council, it is uncertain whether and if so, how, the Recast Insolvency Regulation will apply to the administrations of the Companies or the CVAs and what, if any, recognition will be given to the Administrators or the CVA Supervisors by the courts of the EU Member States after 29 March 2019. Given this uncertainty, the Administrators consider, and I agree, that it is prudent not to extend the administrations beyond 29 March 2019 at this stage.'
Subject to reaching final agreement with the local tax authorities, the administrators consider that it should be possible to complete the administrations of the companies (other than three of them, one of which is the company responsible for making distributions) within a one year extension period. What about a new extension? The Court:
'The Administrators intend to seek further directions in late 2018 in respect of the administration of any of the Companies which is likely to continue beyond 13 January 2019. By that time, it is hoped that the position of the administrations and CVAs following the withdrawal of the United Kingdom from the European Union will be clearer.'
Snowden J, therefore, proposes to grant the one year extensions sought by the administrators.