Board of Directors of Rizzo-Bottiglieri-De Carlini Armatori SpA as Debtor-in-Possession Of Rizzo-Bottiglieri-De Carlini Armatori SpA v Rizzo-Bottiglieri-De Carlini Armatori SpA

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 2217 of 2012

BETWEEN: THE BOARD OF DIRECTORS OF RIZZO-BOTTIGLIERI-DE CARLINI ARMATORI SPA AS DEBTOR-IN-POSSESSION OF RIZZO-BOTTIGLIERI-DE CARLINI ARMATORI SPA

AND: RIZZO-BOTTIGLIERI-DE CARLINI ARMATORI SPA

JUDGE: JACOBSON J DATE: 20 FEBRUARY 2013 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 The applicant, as the foreign representative of the company, makes application for recognition of an Italian concordato preventivo proceeding over the respondent as foreign main proceedings under article 17 of the UNCITRAL Model Law on Cross-Border Insolvency, which is schedule 1 to the Cross-Border Insolvency Act 2008 (Cth). The matter has been before me on several occasions, and I granted interim relief under article 19 of the model law on 20 December 2012. 2 I am satisfied for reasons set forth in Mr Stewart's written submissions dated 20 December 2012 and 7 February 2013, which I have marked respectively as MFI1 and MFI2, that the substantive and procedural requirements have been satisfied. 3 In particular, article 17(1)(a), which requires that the proceeding be a collective, judicial or administrative proceeding in a foreign state, pursuant to a law relating to insolvency, is established in the evidence before me. 4 Here, the relevant Italian court, which is the court of Torre Annunziata, made the decree on 31 October 2012, pursuant to section 161 of the Italian Insolvency Law. The relevant provisions of the Italian insolvency law are sections 160 to 168, and these are annexed to and explained in exhibits to the affidavit of the managing director of the respondent company, Mr Rizzo, sworn on 19 December 2012. 5 I am also satisfied that the applicant is the foreign representative, in accordance with article 17(1)(b). The provisions of section 167 of the Italian Insolvency Law are explained in an opinion attached to Mr Rizzo's affidavit, and set out at page 72 of the exhibits. The effect of section 167 is that the board of directors of the company is in the position of a debtor in possession, similar to that which is provided for in Chapter 11 of the US Bankruptcy Code. 6 There is authority for the proposition that a debtor-in-possession may be recognised as having the necessary characteristics to qualify as a foreign representative: see Moore, as Debtor-in-Possession of Australian Equity Investors v Australian Equity Investors [2012] FCA 1002 at [12], per Emmett J. 7 Also, I have taken into account the fact that the applicant in the present case was recognised as foreign representative in parallel recognition proceedings in the High Court of Justice in England. 8 The formal requirements of article 17(1)(c), which refers back to the requirements stated in article 15(2), are also satisfied for the reasons explained in Mr Stewart's submissions, MFI1 at paragraph 12, and I do not need to say anything further about that issue. 9 So too are the other relevant requirements of article 17(2). 10 An issue arose in the application as to the requirements of rr 15A.6 and 15A.7 of the Federal Court (Corporations) Rules 2000. I was satisfied for reasons stated by Mr Stewart on 7 February that I could dispense with the requirements of publication in a newspaper in Italy, this being required by r 15A.6. 11 The reasons that I did so were essentially explained in an affidavit of Ms Wilmshurst, dated 7 February 2013. In particular, there was publication in the Lloyd's List, on 4 December 2012, of the recognition order made by the High Court of Justice, Chancery Division, Companies Court, England. 12 The company is engaged in the shipping business, and it is clear that most potential creditors of the company are based outside of Italy, because the company's vessels trade worldwide and rarely, if ever, call in Italy. 13 Moreover, evidence which was put before me this morning in a further affidavit of Mr Rizzo shows the difficulties which can sometimes arise where notification is given to overseas creditors. Mr Rizzo sets out in his most recent affidavit the steps which he took to notify creditors in Italy. The steps which he took show that, rather than illuminating the position for creditors, it led to some confusion which had to be further explained by email correspondence with the Italian creditors. 14 The approach which I took on 7 February to dispense with the requirements of publication in Italy were in accordance with a large line of authority, including the decision of Emmett J in Moore to which I have already referred. 15 His Honour in that case, in order 9, effectively dispensed with the requirement of the Rules by requiring only publication in Australia. The rationale for that course has only been touched upon in the various authorities which are listed in paragraph 13 of MFI2. 16 An important consideration is that liberty to apply is reserved so that any creditor in the jurisdiction may, if satisfactory grounds are put forward, invoke liberty to apply, and thereby avoid any prejudice arising from the making of the recognition order. 17 For the same reasons, it is appropriate to dispense with the requirements of r 15A.7 that there be publication of the making of the final orders published in Italy. 18 For these reasons, I propose to make orders in terms of the draft orders handed to me by Mr Stewart, which I will sign and date, and place with the court papers. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.