Rep of Viscount re Cochrane and Orb ARL [2017] JRC 025 (16 February 2017)

judgment the commissioner: 1. In this case the Viscount applies by representation for the Court to send two letters of request to the High Court of Justice of England and Wales ("the High Court") seeking assistance in connection with two désastres.

2. The Court granted the application at the conclusion of the hearing and we now give short reasons to explain that decision. Background 3. The background to this complex matter is set out with great clarity at paragraphs 1 - 25 of the judgment of this Court (Commissioner Clyde-Smith) on 28 th September, 2016, ( Representation of Harbour Fund II LP [2016] JRC 171 - "the September judgment"). Those paragraphs are to be regarded as being repeated and incorporated in this judgment.

4. In short, there is a complicated background with a number of transactions and pieces of litigation involving various parties including Orb A. R. L. ("Orb"), a company incorporated in Jersey and Dr Gail Cochrane ("Dr Cochrane"), a resident of Jersey. Dr Cochrane is believed to be the sole shareholder of Orb.

5. In the September judgment, the Court rejected an application by Harbour Fund II LP ("Harbour"), a creditor of Orb, for the Court to issue a letter of request to the High Court seeking the making of an administration order in that jurisdiction in respect of Orb. The Court accepted that Orb was insolvent on a cash flow basis but considered that as a matter of discretion, rather than issue a letter of request to the High Court seeking the appointment of an administrator, it would be more appropriate for there to be a désastre and for the Viscount then to seek such assistance from the High Court as might be appropriate.

6. On 24 th November, 2016, for the reasons set out in a judgment dated 12 th January, 2017, Harbour Fund II LP v Orb A. R. L and others [2017] JRC 007 , the Court upon the application of Harbour declared the property of Orb and Dr Cochrane to be en désastre . As set out in the judgment, it found that both Orb and Dr Cochrane were insolvent but had assets which could be realised for the benefit of their creditors.

7. Article 8 of the Bankruptcy (Désastre)(Jersey) Law 1990 ("the Law") provides as follows:- "8. Property of debtor at date of declaration to vest in the Viscount (1) All the property and powers of the debtor specified in paragraph (2) shall vest in the Viscount immediately upon the making of the declaration. (2) Subject to paragraph (3) and Article 8A, the property and powers of the debtor to vest in the Viscount under this Article and be divisible amongst the debtor's creditors shall comprise:- (a) all property belonging to or vested in the debtor at the date of the declaration; (b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of any property as might have been exercised by the debtor for the debtor's own benefit at the date of the declaration. (3) ....". It follows that the property of Dr Cochrane and Orb has been vested in the Viscount since 24 th November, 2016, as has the capacity to exercise any power in, over or in respect of such property. The present application 8. The events described in the September judgment suggest that Orb and Dr Cochrane have owned assets of a very substantial value. For example, reference is made at para 19 of the September judgment to a finding by Popplewell J in certain proceedings in the High Court that the value of assets transferred to Dr Cochrane pursuant to an agreement (referred to as the 'Isle of Man Settlement Agreement') in December 2013 exceeded £150m. This is supported by the fact that, in her affidavit to this Court as recently as 7 th September, 2016, Dr Cochrane stated that she was "a very wealthy woman, with holdings in dozens of companies worldwide, including Orb".

9. Despite this, Dr Cochrane has now asserted to the Viscount that she has very few assets. According to her recently completed personal questionnaire and statement of income and expenditure required under Article 18 of the Law, Dr Cochrane has advised that her only assets consist of six pieces of jewellery, two shares in a company known as Bodega Limited ("Bodega") and an unknown value in a partnership, which the Viscount believes is a share in the medical practice from which she works. Other items of value currently in her possession, which include a substantial art and wine collection, a rib, several high-value motor vehicles and other chattels are said to be owned by Bodega, of which the 99.9% shareholder is said to be Litigation Capital Funding, a New York based entity believed to be owned by Mr Anthony Smith, the brother of Dr Gerald Smith. Dr Smith is the former husband of Dr Cochrane and has twice been convicted of offences of fraud and served a prison sentence. Dr Smith has advised the Viscount that Orb does not have nor has it ever had any assets.

10. It is clear that the Viscount is not satisfied that this is a true statement of the position. That is not surprising in view of the observation of Popplewell J in the proceedings referred to earlier where at para 181 of his judgment dated 15 th April, 2016, he stated:- "This high handed behaviour, and refusal to recognise the authority of the Court's orders, is of a piece with their abusive behaviour in other respects. There is a long history of behaviour by the Orb Parties in these and other proceedings which shows that they are prepared to mislead the Court and abuse the Court's processes for the improper collateral purpose of putting pressure on Mr Ruhan. It includes the following ...." The judge's definition of the Orb Parties included Orb itself and Dr Cochrane.

11. The Viscount also points in her affidavit supporting this application to the fact that on 29 th April, 2016, Dr Cochrane executed a loan note as obligor in favour of a Panamanian foundation called Phoenix Group Foundation for the sum of £73.75m. It is said that the loan note arose in the context of the settlement of the English proceedings in which Popplewell J had given the judgment referred to earlier and other related actions.

12. The application by Harbour for the declaration of désastre contained a list of assets of which Dr Cochrane was said to be the beneficial owner. That list was apparently taken from the loan note referred to in the preceding paragraph to which of course Dr Cochrane herself was a party. That list of assets (including assets owned directly or indirectly through companies) included real property in Poland, London, Birmingham, Majorca, Italy and Canada and her assets were said to have a value of some £58m.

13. Following the declarations en désastre , creditors have submitted claims, together with supporting documents, against Dr Cochrane in the sum of £765,532,125 and against Orb in the sum of £562,889,913. The Viscount believes there is potentially some degree of duplication in the claims as some creditors have claimed against Dr Cochrane as guarantor of the obligations of Orb. Nevertheless, given the background described in the September judgment and the judgment of Popplewell J and the other matters referred to above, the Viscount regards it as inconceivable that both Dr Cochrane and Orb have been able to acquire such colossal levels of debt without owning any of the assets listed by Harbour in its application for désastre. The Viscount also notes that Dr Cochrane and Orb are subject to ongoing and vigorously fought legal proceedings in England. Five such sets of proceedings are listed in her affidavit.

14. Not surprisingly, in view of the contradictory evidence regarding the assets of Dr Cochrane and Orb, the Viscount regards it as imperative that (i) she is able to gather information from third parties about Orb and Dr Cochrane in order to ascertain what assets they may have (or had) or may have a claim to; (ii) if so advised, she is able to intervene, if necessary, in the English proceedings brought against (or by) Dr Cochrane and Orb and protect those assets caught by injunctions in those proceedings over which Dr Cochrane or Orb may have a claim; and (iii) to the extent assets have been wrongfully removed or diverted from Orb by its directors or have been transferred by Dr Cochrane, to bring proceedings against those involved if thought fit.

15. The Viscount's second affidavit exhibits a list of the people and companies whom she believes may be in possession of relevant information and documentation that may assist in the identification and recovery of assets. The list also explains briefly the grounds upon which she has formed the belief that they may be able to assist. They all reside in England. This is not surprising as Dr Cochrane had a family office in London which appears to have administered her financial affairs.

16. Given the background to this case, the Court is in no doubt that the Viscount needs to be able to gather information from third parties in England and to obtain documentation in order to ascertain what assets Orb and/or Dr Cochrane may have (or have had) or may have a claim to and be able to intervene if necessary in the various English proceedings to which Dr Cochrane and Orb are parties. These steps are required in the interests of the creditors of both Dr Cochrane and Orb.

17. In those circumstances, the Court is in no doubt that it should issue a letter of request to the High Court seeking the assistance of that Court in accordance with Section 426 of the Insolvency Act 1986 in respect of each désastre . The Court approved the draft letter of request (as amended in accordance with the suggestions of the Court during the course of the hearing). That letter of request essentially seeks recognition of the Viscount in England with authority for her to exercise her powers and functions as administrator of the two désastres together with a request that, in the event of the persons listed in the letter of request not voluntarily attending upon the Viscount and surrendering all relevant books and records, they may be summoned by the High Court either to attend upon the Viscount to be questioned on oath and produce relevant books and records or to attend upon the High Court for oral examination and production of relevant books and records. The letter of request also seeks permission for the Viscount to bring, institute, defend or intervene in any legal proceedings in England and Wales relating to Orb or Dr Cochrane together with various other ancillary orders. Authorities Representation of Harbour Fund II LP [2016] JRC 171 . Harbour Fund II LP v Orb A. R. L and others [2017] JRC 007 . Insolvency Act 1986. Page Last Updated: 16 Feb 2017 BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII