Frege in his Capacity as Foreign Representative of Greensill Bank AG v Greensill Bank AG

Federal Court of Australia|2021-05-06|Before: Mr J, Anastassiou J

Counsel for the Plaintiff: Mr S. J Maiden QC with Ms V. E Bell

Solicitor for the Plaintiff: MinterEllison

Counsel for the Interested Parties (BBC Trade Credit Pty Ltd and Tokio Marine Management (Australasia) Pty Ltd): Mr J. Hutton

Counsel for the Interested Party (Alvance Aluminium Duffel BV): Mr S. Aspinall

Solicitor for the Interested Party (Alvance Aluminium Duffel BV): Norton Rose Fulbright

Solicitor for the Interested Party (The German Deposit Protection Fund of the Federal Association of German Banks): Mr T. Grave of Clifford Chance

BETWEEN: MICHAEL FREGE IN HIS CAPACITY AS FOREIGN REPRESENTATIVE OF GREENSILL BANK AG Plaintiff

order made by: ANASTASSIOU J DATE OF ORDER: 6 MAY 2021

Pursuant to Art 17(1) of the Model Law, the Insolvenzverfahren commenced on 16 March 2021 (the Proceeding) is recognised as a foreign proceeding within the meaning of Art 2(a) of the Model Law.
Pursuant to Art 17(2) of the Model Law, the Proceeding is recognised as a foreign main proceeding within the meaning of Art 2(b) of the Model Law.
The plaintiff is recognised as foreign representative of the Proceeding within Art 2(d) of the Model Law.
For the purposes of Art 20(2) of the Model Law, and s 16 of the Cross-Border Insolvency Act 2008 (Cth), the scope, and the modification or termination, of the stay and suspension referred to in Art 20(1) of the Model Law be the same as would apply if the stay or suspension arose under Part 5.4B of Chapter 5 of the Corporations Act 2001 (Cth) (Corporations Act), and as if Part 5.4B of the Corporations Act applied to the defendant.
Pursuant to Art 21 of the Model Law: (a) the administration, realisation and distribution of all the defendant's assets located in Australia is entrusted to the plaintiff; and (b) the plaintiff may examine witnesses, take evidence or require the delivery of information concerning the defendant's affairs, rights, obligations or liabilities as if he were a liquidator appointed to the defendant under Part 5.4B of the Corporations Act.
The requirements of r 15A.7 of the Federal Court (Corporations) Rules 2000 (Cth) (Rules) be dispensed with and in lieu thereof the plaintiff, within 10 business days of the making of these Orders: (a) publish notice in the form of Form 21 in The Australian and Australian Financial Review newspapers; (b) publish notice in the form of Form 21 on the defendant's website; (c) give notice of the making of these Orders in the form of Form 21 by email to each person for whom the defendant has a valid email address who is: (i) to the knowledge of the defendant a creditor of the defendant or claims to be a creditor of the defendant; and (ii) either: A. is domiciled in Australia; or B. has a claim to be a creditor arising from dealing with the defendant in Australia. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

introduction 1 By originating process dated 30 March 2021, the Plaintiff, Dr Michael Frege, who is the insolvency administrator appointed to the Defendant, Greensill Bank AG, by the local court in Bremen, Germany, seeks recognition of a German insolvency proceeding pursuant to Art 17 of the UNCITRAL Model Law on Cross-Border Insolvency, which is Schedule 1 to the Cross-Border Insolvency Act 2008 (Cth), and related relief. 2 In this application, the Plaintiff relies on the following affidavits: (1) an affidavit of Dr Charlotte Schildt sworn in Germany on 29 March 2021 (the First Schildt Affidavit); (2) an affidavit of Dr Schildt sworn in Germany on 5 May 2021 (the Second Schildt Affidavit); (3) an affidavit of Georgia Smith sworn on 27 April 2021 (the First Smith Affidavit); (4) an affidavit of Ms Smith sworn on 6 May 2021 (the Second Smith Affidavit); and (5) an affidavit of Brendon Watkins sworn on 5 May 2021 (the Watkins Affidavit). 3 The Plaintiff also filed cogent written submissions with the Court on 5 May 2021, which I acknowledge, and gratefully adopt, in delivering my reasons. Moreover, although there were appearances for a number of interested creditors, none of those parties filed any affidavits or submissions with the Court nor did they oppose the relief sought by the Plaintiff in the originating process.

background 4 On 16 March 2021, the Amtsgericht Bremen, a German local court, made orders appointing the Plaintiff as insolvency administrator of Greensill Bank (the German Proceeding) pursuant to the Insolvenzordung (the German Insolvency Act). The basis of the German Proceeding was Greensill Bank's imminent illiquidity in accordance with ss 2, 3, 11 and 16 of the German Insolvency Act. 5 On 31 March 2021, I made interim orders granting the Plaintiff interim relief pursuant to Art 19 of the Model Law, pending hearing and determination of the application for recognition on 6 May 2021, and made directions as to service dispensing, with the requirements in rr 15A.3(4), 15A.4(2), 15A.6(1) and 15A.7(1)(b)-(d) of the Federal Court (Corporations) Rules 2000 (Cth). 6 For the reasons that follow, I am satisfied that the orders sought in the originating process should now be made.

Preliminary matters 7 In the first instance, I observe that the application is made by the proper party. Article 2(d) of the Model Law defines a 'foreign representative' as a person or body, including one appointed on an interim basis, authorised in a foreign proceeding to administer the reorganisation or liquidation of the debtor's assets or affairs, or to act as a representative of the foreign proceeding. As the insolvency administrator appointed by the German court with the power to administer the liquidation of Greensill Bank's assets, I am satisfied that the Plaintiff is a foreign representative within the meaning of Art 2(d) of the Model Law. 8 I am also satisfied that there has been compliance with the earlier orders I made on 31 March 2021 for the advertising of the application presently before me. In particular, notice has been given in the Australian and Australian Financial Review newspapers, on Greensill Bank's website and to relevant creditors. These matters are deposed to in the First Smith Affidavit, which relevantly annexes copies of the advertisements and notices to be published.

Recognition as a foreign main proceeding 9 Further, I am satisfied that the elements for the recognition of the German Proceeding as a foreign proceeding and as a foreign main proceeding have been made out. 10 Pursuant to Art 17(1) of the Model Law, I must recognise the foreign proceeding if certain substantive and procedural requirements have been satisfied. Those substantive and procedural requirements are found in in Art 17 of the Model Law, Art 15 of the Model law (as modified by s 13 of the Act) and Div 15A of the Corporations Rules. 11 As I have indicated, the requirements for recognition have been satisfied in the present case. In respect of Art 17(1)(a), the German Proceeding is a 'foreign proceeding' within the meaning of Art 2(a) of the Model law as: (1) it is a collective judicial or administrative proceeding in a foreign State, whereby the Amtsgericht Bremen has ordered, pursuant to the German Insolvency Act, that Greensill Bank's business will be wound up for the purpose of realising its assets and distributing the proceeds to creditors; (2) it is a proceeding conducted pursuant to a law relating to insolvency, being the German Insolvency Act; (3) the assets and affairs of Greensill Bank are subject to the control and supervision of a foreign court during the proceeding under the German Insolvency Act; and (4) as alluded to above, the proceeding has been commenced for the purpose of, in effect, the liquidation of Greensill Bank. 12 In respect of Art 17(1)(b), as I have indicated above, the Plaintiff satisfies the definition of 'foreign representative' in Art 2(d) of the Model Law. 13 Article 17(1)(c) is also satisfied as the Court has before it a certified copy of the decision commencing the foreign proceeding, being a certified translation of the Bremen local court's orders. Indeed, pursuant to Art 16(2) of the Model Law, this Court is entitled to presume that documents submitted in support of the application for recognition are authentic, whether or not they have been legalised. 14 Further, in respect of Art 17(1)(d), by operation of s 10(b)(i) of the Act, the Federal Court of Australia is a competent court in the sense referred to in Art 4 of the Model Law. 15 I also observe that the requirements in Art 15(2) of the Model Law are incorporated in Art 17(1)(c) and have been satisfied for the reasons explained above. In addition, Art 15(3) requires an application for recognition to be accompanied by a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative. Section 13 of the Act modifies that requirement, such that the application must also be accompanied by a statement identifying, relevantly, any appointment of a receiver within the meaning of s 416 of the Corporations Act 2001 (Cth) and all proceedings under Chapter 5 of the Corporations Act that are known to the foreign representative. That requirement is satisfied by the matters deposed to in the First Schildt Affidavit, namely, that she is not aware of: (a) any receivers having been appointed to Greensill Bank; (b) any controller or controller manager having been appointed in relation to the property of Greensill Bank; or (c) any proceedings under Chapter 5, section 601CL or Schedule 2 of the Corporations Act against Greensill Bank. 16 In relation to the question of whether the foreign proceeding should be recognised not only as a foreign proceeding but as a foreign main proceeding pursuant to Art 17(2)(a), I am satisfied on the evidence that Greensill Bank has its centre of main interest (COMI) in Germany, and accordingly the foreign proceeding should also be recognised as a foreign main proceeding. 17 Article 16(3) of the Model Law provides that in absence of proof to the contrary, a company's COMI is presumed to be in the State in which its registered office is located. The registered office of Greensill Bank is located in Bremen, Germany. In the present case, there is nothing to displace the presumption in Art 16(3) of the Model Law. To the contrary, there is substantial evidence which supports the conclusion that Greensill Bank's COMI is in Germany, including that all of Greensill Bank's strategic business decisions, such as decisions relating to financial or operational matters, were made at or otherwise issued from its registered office in Bremen; all of Greensill Bank's books and records were held at its registered office in Bremen; and the majority of its creditors are situated in Germany.

Article 20 stay 18 I am also satisfied that the operation of the stay that arises under Art 20(1)(a) of the Model Law is appropriately modified in paragraph 4 of my orders dated 6 May 2021, for the purposes of Art 20(2) of the Model Law and s 16 of the Act. In substance, the German Proceeding is a liquidation whereby Greensill Bank's business relationships will be resolved, its assets realised and the proceeds distributed to creditors. That is to say, the purpose of the German Proceeding, and the procedures for giving effect to that purpose, are akin to a liquidation under Australian law. Accordingly, it is appropriate to, in effect, regard the foreign proceeding, for the purposes of any potential claim that may be made in future, as triggering a stay pursuant to Part 5.4B of Chapter 5 of the Corporations Act, as if the Defendant were being wound up.

Article 21 relief 19 I am also satisfied that there is a proper basis under Art 21 of the Model Law to entrust the Plaintiff with the administration, realisation and distribution of Greensill Bank's assets located in Australia, and permit the Plaintiff, if so advised, to invoke the power to examine witnesses, take evidence and require the delivery up of information concerning Greensill Bank's affairs, rights, obligations and liabilities as if he were a liquidator appointed under Pt 5.4B of the Corporations Act. This will assist with the liquidation of Greensill Bank and allow for the efficient identification of assets and liabilities in Australia. 20 The power in Art 21 of the Model Law is similar to a public examination by a liquidator of persons who may have information concerning the affairs of the company in question. The exercise of that power is subject to an application in the usual way to a Registrar of the Court for leave to examine particular persons. The exception to this is that the Plaintiff would not require leave to examine the directors of Greensill Bank. However, in circumstances where all the directors are residents in Germany, and unlikely to travel to Australia without knowing they may be examined should they do so, I am satisfied it is appropriate to make the orders in the form sought.

Disposition 21 For the above reasons, I am satisfied that it is appropriate to make the orders sought by the Plaintiff in the form I have indicated. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Anastassiou.

Cross-Border Insolvency (Arts 2, 15, 17, 20, 21) Federal Court (Corporations) Rules 2010(Cth)

At a glance

Court

Decision date

Before

Source

Judgment (17 paragraphs)

Parties

Legislation Cited (4)

Cited By (1)