Vol 9 (2012) - Issue 4

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Akers and anr v Deutsche Bank AG (Re Chesterfield United Inc and Partridge Management Group SA) [2012] EWHC 244 (Ch)

Introduction
Akers and anr v Deutsche Bank AG (Re Chesterfield United Inc and Partridge Management Group SA) [2012] EWHC 244 (Ch) is a cross border insolvency case that is demonstrative of the Court’s increasing willingness to use its powers under English law when exercising its discretion to treat foreign insolvency office holders as if they are domestic office holders.
Before Mr Justice Newey were applications made by the joint liquidators of two companies incorporated in the British Virgin Islands, Chesterfield United Inc ('Chesterfield') and Partridge Management Group SA ('Partridge'), seeking orders requiring Deutsche Bank AG ('Deutsche Bank') to produce various documents. The joint liquidators were appointed by the Eastern Caribbean Supreme Court on 10 May 2010 and the applications were made pursuant to Article 21(1) of the UNCITRAL Model Law on Cross Border Insolvency, as incorporated into English law by the Cross Border Insolvency Regulations 2006.

Background
The applications arose in relation to various transactions entered into by Chesterfield and Partridge in August and October 2008. In short, between them, Chesterfield and Partridge paid EUR 450 million for credit linked notes ('CLNs') issued by Deutsche Bank. The CLNs provided for Chesterfield and Partridge to receive interest payments and ultimately to have the sums invested returned to them. However, in the event that a 'credit event' occurred in relation to Kaupthing hf ('Kaupthing'), Chesterfield and Partridge could lose both the principal and the right to further interest payments (both Chesterfield and Partridge being owned by offshore vehicles which were in turn owned by high net worth individuals associated with Kaupthing).
As well as the CLNs, Partridge entered into a credit default swap ('CDS') with Deutsche Bank, with Partridge paying EUR 50 million to Deutsche Bank at the outset. If a credit event did not occur in relation to Kaupthing, Deutsche was to pay Partridge EUR 50 million on maturity.
Of course, on 8 October 2008, Kaupthing, Singer and Friedlander Limited went into administration, with a Resolution Committee being appointed in respect of Kaupthing itself the following day. As this constituted a credit event under the terms of the CLNs, Chesterfield and Partridge lost all the money that had been invested.

Information sought
In his evidence in support of the applications, one of the joint liquidators stated that it was 'very difficult to see how the transactions made commercial sense from the point of view of Chesterfield and Partridge' and the request for information was said to be to enable to joint liquidators to explore how Chesterfield and Partridge might have expected to benefit from the aforementioned transactions. Only once they had this information, it was said, would the joint liquidators be able to perform their statutory duties properly. In this regard the point should be made that Deutsche Bank’s position was that the CNLs were not commercially unusual or unreasonable.

The applications
As noted above, the joint liquidators’ applications were made pursuant to Article 21(1) of the UNCITRAL Model Law on Cross Border Insolvency, as incorporated into English law by the Cross Border Insolvency Regulations 2006. The relevant part of Article 21(1), on which the joint liquidators relied provides:
Upon recognition of a foreign proceedings, 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: …
(d) providing for the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor’s assets, affairs, rights, obligations or liabilities …