Recognition and Assistance for Foreign Insolvency Office Holders in England

If you are a director, creditor, or insolvency professional involved in an insolvency process outside the UK, you may want to understand the consequences if that insolvent company or individual is found to have UK assets. 

English law allows for easy recognition of insolvency office holders - such as liquidators, administrators, or receivers – that have been appointed in foreign jurisdictions ("Overseas IP" or "OIP"). In many cases this is advantageous, as it allows for actions in support of a foreign insolvency process to be taken in England by OIPs relatively easily, without the costs and duplication of appointing an additional UK insolvency professional. 

OIPs looking to take steps in the UK have two principal routes to recognition, which we outline below. We also outline a third option for creditors looking to appoint a UK IP over a company abroad. 

Route 1: Cross-Border Insolvency Regulations 2006 (CBIR)

Under the CBIR 2006 an OIP administering foreign insolvency proceedings can apply to the British courts for recognition of those insolvency proceedings. The CBIR brings into UK law the UNCITRAL Model Law on Cross-Border Insolvency regime, which provides a streamlined process for recognising foreign insolvency proceedings and granting relief to OIPs appointed in jurisdictions that have adopted the Model Law (e.g. Hong Kong, USA, BVI, Cayman, Bermuda, Cyprus). 

Application for recognition is conducted at a low level of English court, is procedurally simple, and not open to challenge if the OIP has been properly appointed in their home state. 

Once recognised, an OIP may take actions similar to an English IP, such as: 

• Freezing bank accounts based in England; 

• Undertake enforcement action on Real Estate or other assets; and

• Obtaining documents and information from a debtor to support proceedings in other jurisdictions. 

An example of the latter took place in the case of Re Ho Wan Kwok[1].

Chapter 11 Bankruptcy of Ho Wan Kwok

In 2022, Mr Kwok, a businessman with dual citizenship of Hong Kong and the UK, entered Chapter 11 bankruptcy in the USA, and a US bankruptcy trustee (the "US Trustee") was appointed to oversee the administration of Mr Kwok's estate. Amongst his many global assets, Mr Kwok was involved in litigation against UBS AG in London's High Court, and the Trustee sought access to documents relating to the litigation to assess the value and viability of the claims for the benefit of the bankruptcy estate. 

Mr Kwok's co-claimants attempted to block the Trustee from obtaining access to these documents, and to bypass this a cross-border insolvency application was made for recognition of the US Trustee in England to allow him to access to the case files. 

Although contested over several hearings, the Trustee was able to gain access to the documents due to the recognition of their status as foreign office holder in the UK. 

Our team has direct experience of this case, which was one of the largest CBIR claims we are aware of in recent years. We have also used CBIR applications to assist foreign office holders in a number of other jurisdictions. 

Route 2: Section 426 of the Insolvency Act 1986 (IA86)

Section 426 of IA86 provides an alternative route for recognition and assistance of foreign insolvency processes in English law. It has additional advantages, although is more procedurally complex and requires an application to a higher level of court.

The UK is a sovereign state consisting of multiple countries, and the intention of s.426 is to allow an insolvency office holder from any part of the UK to be recognised in England. However, for historical reasons, "any part of the UK" under IA86 is defined to include a list of several countries which have a legal connection with the United Kingdom. This list specifically includes the Cayman Islands, the British Virgin Islands, and Hong Kong.[1]

The primary advantage of recognition by this route is that once appointed an OIP can seek the powers of an English insolvency office holder in the United Kingdom, instead of simply relying on the assistance of the British courts in support of the OPI's existing domestic powers as would be the case under CBIR.

This allows, for example, an OIP to bring English claw back claims, which may have greater value and have a longer look back period than clawback claims available in the OIP's home jurisdiction. Investigative powers available under English law may also be more extensive than those available to an OPI domestically.

Route 3. Using an English Insolvency Process 

It is possible for the English court to appoint a liquidator or administrator over a foreign company, provided it is sufficiently comfortable that it has jurisdiction to do so. Jurisdiction will usually depend on the location of the assets. A key feature is proving that creditors of the foreign company understand its centre of main interests to be in England. 

Many jurisdictions lack the legal infrastructure to provide a prospective office holder with the tools that may be required to effect a complex restructuring whilst ensuring efficient survival of the company's business and maintaining value. Frequently and English administration process of a foreign company can provide recovery options that would not be available under the domestic regime.

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Our team has extensive experience dealing with a range of restructuring and insolvency matters. We have direct experience acting under both regimes discussed above, including in the Ho Wan Kwok matter, and are well-placed to advise on the most effective route for recognition and enforcement in England. We also have direct experience of successfully placing overseas companies and LLPs into English administration.