T&N Ltd. & Ors, Re [2004] EWHC 2361 (Ch) (21 October 2004)
The administrators cannot be required to propose company voluntary arrangements or schemes of arrangement to implement the US Plan of Reorganisation if, in their judgment, the Plan is fundamentally unfair to UK creditors or would result in a worse outcome than a controlled realisation of assets. The court varied the administration orders to include a more advantageous realisation of assets as a purpose, confirming the administrators' discretion and duties under English insolvency law.
- Citation
- [2004] EWHC 2361 (Ch)
- Parties
- Applicants (administrators): T&N Limited & Others; Ultimate Holding Company/interested Party: Federal-Mogul Corporation Inc (FMC); Respondents/interested Parties: Official Committees of Unsecured Creditors and Asbestos Claimants; Respondents/interested Parties: Trustees of the T&N Pension Scheme; Respondents/interested Parties: UK Asbestos Claimants (represented by named individuals)
- Jurisdiction
- England and Wales
- Judgment Date
- 21 October 2004
- Procedural Posture
- Application for Directions Under Insolvency Act 1986 / Interlocutory Application for Directions; Hearing on Administrators' Duties Regarding Cvas/schemes of Arrangement and Variation of Administration Orders
- Outcome
- Administration orders varied to include a more advantageous realisation of assets as a purpose; administrators not directed to propose CVAs or schemes of arrangement at this stage.
- Legal Topics
- Administration Orders, Company Voluntary Arrangements (cvas), Schemes of Arrangement, Cross Border Insolvency Protocol, Asbestos Related Liabilities, Pension Fund Deficits, Chapter 11 Proceedings, Plan of Reorganisation
Case Brief
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Parties
T&N Limited & Others
Applicants (administrators)
Federal-Mogul Corporation Inc (FMC)
Ultimate Holding Company/interested Party
Official Committees of Unsecured Creditors and Asbestos Claimants
Respondents/interested Parties
Trustees of the T&N Pension Scheme
Respondents/interested Parties
UK Asbestos Claimants (represented by named individuals)
Respondents/interested Parties
Procedural Posture
Application for Directions Under Insolvency Act 1986 / Interlocutory Application for Directions; Hearing on Administrators' Duties Regarding Cvas/schemes of Arrangement and Variation of Administration Orders
Legal Issues
- 1 Whether administrators should propose CVAs or schemes of arrangement to implement the US Plan of Reorganisation for UK companies
- 2 Whether the Plan is fundamentally unfair to UK creditors under English insolvency law
- 3 Whether creditors would achieve a better result from a controlled realisation of assets than under the Plan
Ratio Decidendi
The administrators cannot be required to propose company voluntary arrangements or schemes of arrangement to implement the US Plan of Reorganisation if, in their judgment, the Plan is fundamentally unfair to UK creditors or would result in a worse outcome than a controlled realisation of assets. The court varied the administration orders to include a more advantageous realisation of assets as a purpose, confirming the administrators' discretion and duties under English insolvency law.
Court Disposition
Administration orders varied to include a more advantageous realisation of assets as a purpose; administrators not directed to propose CVAs or schemes of arrangement at this stage.
Orders
- Administration orders for the relevant companies are varied to specify as an additional purpose a more advantageous realisation of assets than on a winding-up, except for three companies where this was already specified.
- Balance of the application adjourned generally with liberty to restore on 21 days' notice.
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