Hur v Samsun Logix Corporation

Legislation 7 I will, for convenience, set out the relevant provisions of the Act. Section 5(1) defines Model Law to mean the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law, set out in the Annex to the United Nations General Assembly Resolution A/Res/52/158, the English text of which is set out in Schedule 1 to the Act. 8 Section 6 of the Act is as follows: Subject to this Act, the Model Law, with the modifications set out in this Part, has the force of law in Australia. 9 Section 7(1) provides as follows: In the Model Law (as it has the force of law in Australia), a reference to this State is a reference to Australia. 10 Section 8 provides that: The Model Law has the force of law in Australia as if the Model Law referred to: (a) the Bankruptcy Act 1966; and (b) Chapter 5 (other than Parts 5.2 and 5.4A), and section 601CL, of the Corporations Act 2001; wherever the Model Law provides that the laws of the enacting State relating to insolvency are to be identified. 11 Section 10(b)(1) confers jurisdiction on this court in the present application. 12 Section 13 provides as follows: In addition to the requirement in paragraph 3 of Article 15 of the Model Law (as it has the force of law in Australia) that an application for recognition be accompanied by a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative, the application must be accompanied by a statement identifying: (a) all proceedings under the Bankruptcy Act 1966 in respect of the debtor; and (b) any appointment of a receiver (within the meaning of section 416 of the Corporations Act 2001), or a controller or a managing controller (both within the meaning of section 9 of that Act), in relation to the property of the debtor; and (c) all proceedings under Chapter 5, or section 601CL, of the Corporations Act 2001 in respect of the debtor; that are known to the foreign representative. 13 Section 16 states: For the purposes of paragraph 2 of Article 20 of the Model Law (as it has the force of law in Australia), the scope and the modification or termination of the stay or suspension referred to in paragraph 1 of that Article, are the same as would apply if the stay or suspension arose under: (a) the Bankruptcy Act 1966; or (b) Chapter 5 (other than Parts 5.2 and 5.4A) of the Corporations Act 2001; as the case requires. The effect of that section appears to be that the stay is to be to the same extent and effect as under the provisions of the Bankruptcy Act 1966 (Cth) or the Corporations Act. 14 Article 2 of Schedule 1 sets out the definitions which apply. The relevant definitions are set out in paragraphs (a), (b) and (d) as follows: (a) "Foreign proceeding" means a collective judicial or administrative proceeding in a foreign State, including an interim proceeding, pursuant to a law relating to insolvency in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganization or liquidation; (b) "Foreign main proceeding" means a foreign proceeding taking place in the State where the debtor has the centre of its main interests; … (d) "Foreign representative" means a person or body, including one appointed on an interim basis, authorized in a foreign proceeding to administer the reorganization or the liquidation of the debtor's assets or affairs or to act as a representative of the foreign proceeding 15 Article 4 provides, in effect, that this Court has the relevant jurisdiction and is a competent court to make the orders which are sought. 16 Articles 15, 16, 17, 20 and 21(1)(a) are the critical provisions of the Schedule for present purposes and provide as follows: Article 15. Application for recognition of a foreign proceeding 1. A foreign representative may apply to the court for recognition of the foreign proceeding in which the foreign representative has been appointed. 2. An application for recognition shall be accompanied by: (a) A certified copy of the decision commencing the foreign proceeding and appointing the foreign representative; or (b) A certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or (c) In the absence of evidence referred to in subparagraphs (a) and (b), any other evidence acceptable to the court of the existence of the foreign proceeding and of the appointment of the foreign representative. 3. An application for recognition shall also be accompanied by a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative. 4. The court may require a translation of documents supplied in support of the application for recognition into an official language of this State. Article 16. Presumptions concerning recognition 1. If the decision or certificate referred to in paragraph 2 of article 15 indicates that the foreign proceeding is a proceeding within the meaning of subparagraph (a) of article 2 and that the foreign representative is a person or body within the meaning of subparagraph (d) of article 2, the court is entitled to so presume. 2. The court is entitled to presume that documents submitted in support of the application for recognition are authentic, whether or not they have been legalized. 3. In the absence of proof to the contrary, the debtor's registered office, or habitual residence in the case of an individual, is presumed to be the centre of the debtor's main interests. Article 17. Decision to recognize a foreign proceeding 1. Subject to article 6, a foreign proceeding shall be recognized if: (a) The foreign proceeding is a proceeding within the meaning of subparagraph (a) of article 2; (b) The foreign representative applying for recognition is a person or body within the meaning of subparagraph (d) of article 2; (c) The application meets the requirements of paragraph 2 of article 15; (d) The application has been submitted to the court referred to in article 4. 2. The foreign proceeding shall be recognized: (a) As a foreign main proceeding if it is taking place in the State where the debtor has the centre of its main interests; or (b) As a foreign non-main proceeding if the debtor has an establishment within the meaning of subparagraph (f) of article 2 in the foreign State. 3. An application for recognition of a foreign proceeding shall be decided upon at the earliest possible time. 4. The provisions of articles 15, 16, 17 and 18 do not prevent modification or termination of recognition if it is shown that the grounds for granting it were fully or partially lacking or have ceased to exist. … Article 20. Effects of recognition of a foreign main proceeding 1. Upon recognition of a foreign proceeding that is a foreign main proceeding: (a) Commencement or continuation of individual actions or individual proceedings concerning the debtor's assets, rights, obligations or liabilities is stayed; (b) Execution against the debtor's assets is stayed; (c) The right to transfer, encumber or otherwise dispose of any assets of the debtor is suspended. 2. The scope, and the modification or termination, of the stay and suspension referred to in paragraph 1 of the present article are subject to [refer to any provisions of law of the enacting State relating to insolvency that apply to exceptions, limitations, modifications or termination in respect of the stay and suspension referred to in paragraph 1 of the present article]. 3. Paragraph 1 (a) of the present article does not affect the right to commence individual actions or proceedings to the extent necessary to preserve a claim against the debtor. 4. Paragraph 1 of the present article does not affect the right to request the commencement of a proceeding under [identify laws of the enacting State relating to insolvency] or the right to file claims in such a proceeding. Article 21. Relief that may be granted upon recognition of a foreign proceeding 1. Upon recognition of a foreign proceeding, whether main or non-main, where necessary to protect the assets of the debtor or the interests of the creditors, the court may, at the request of the foreign representative, grant any appropriate relief, including: (a) Staying the commencement or continuation of individual actions or individual proceedings concerning the debtor's assets, rights, obligations or liabilities, to the extent they have not been stayed under paragraph 1 (a) of article 20; … 17 The Federal Court (Corporations) Rules 2000 have recently been amended to deal in rule 15A.3 with applications for recognition of a foreign proceeding under article 15 of the Model Law. There is also a practice note dealing with these applications. The practice note is Practice Note No 29.

The application 18 The application was supported by an affidavit of Mr J.K. Marshall, who is a partner in the firm of solicitors for both Mr Hur and Samsun. I am satisfied that Mr Marshall's affidavit provides the necessary evidence to satisfy the requirements of the Act. In particular, I am satisfied that under article 17(1), the Korean proceeding is a foreign proceeding within the meaning of article 2(a). 19 It may not be entirely clear as to what is meant by a "collective" judicial proceeding, but I do not think that anything turns on that. What is important is that the Korean proceeding is a proceeding relating to insolvency in which the assets and affairs of Samsun are subject to the supervision of the Korean Court for the purpose of the re-organisation of that company. This is made clear by the terms of the order of the Korean Court dated 6 March 2009 and the reasons for the decision of that court. 20 I am also satisfied that Mr Hur is a foreign representative who is entitled to make this application. This is because Mr Hur is a foreign representative within article 2(d) because he is the person who has been appointed as the receiver of Samsun. Mr Hur is an officer of Samsun and this demonstrates the analogy of the orders to Chapter 11 of the American bankruptcy laws rather than to an order under Part 5.3A of the Corporations Act. I am therefore satisfied that Mr Hur is a person who is applying for recognition in accordance with article 17(1)(b) of the Act. 21 I am also satisfied that the application meets the requirements of paragraph 2 of article 15. This is because Mr Marshall has annexed to his affidavit a certified copy of the decision of the Korean court commencing the foreign proceeding and appointing Mr Hur as the foreign representative. I am also satisfied that the provisions of article 17(1)(d) apply because the application is made to this Court as a court of competent jurisdiction. 22 In addition, I am satisfied that the Korean proceedings should be recognised as a foreign main proceeding because it is taking place in the State where Samsun has the centre of its main interests. Article 16, paragraph 3 is set out above. There is evidence in the affidavit of Mr Marshall that Samsun's registered office is at the Ima Building, 146-1 Susong-dong, Jongno-gu, Seoul, Korea. Accordingly, the effect of article 17, paragraph 2(a) is that the proceedings be recognised as a foreign-main proceeding because it is taking place in South Korea where Samsun has the centre of its main interests. 23 There are a number of other procedural provisions which are required to be satisfied. These are set out in section 13 of the Act and article 15, paragraph 3 of the Schedule. Mr Marshall's evidence establishes that to the best of his knowledge, there has been no appointment of a receiver within the meaning of section 416 of the Corporations Act, or a controller or a managing controller within the meaning of section 9 of that Act, in relation to the property of Samsun, and there are no other proceedings known to Mr Marshall under chapter 5 or section 601CL of the Corporations Act. 24 Mr Marshall is aware that there are applications of a similar nature that have been made in the United States under Chapter 15 of Title 11 of the United States Code, in England under the Insolvency Act 2000, and in Singapore and Belgium. I have been provided with a minute of the order made by Mr Justice Morgan of the High Court of Justice on 12 March 2009. His Lordship recognised the Korean proceedings as a foreign main proceeding in accordance with the Model Law and made orders under article 20(1) and 21 of the Model Law. The proceedings in the United States, the United Kingdom, Singapore and Belgium are ancillary to the Korean proceedings. 25 I am satisfied that the provisions of rule 15A.6 for notification of known creditors have been complied with. 26 It seems to me to be appropriate to make orders under article 21, paragraph 1 and I will do so. Accordingly, I will make orders in terms of the short minutes of order provided to me by Counsel for the plaintiff which I will sign and date and place with the court papers. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Associate: Dated: 21 April 2009 Counsel for the Plaintiff: P T Russell