Vol 12 (2015) - Issue 1

Article preview

Singularis Holdings Ltd v PricewaterhouseCoopers [2014] UKPC 36; PricewaterhouseCoopers v Saad Investments Co. Ltd [2014] UKPC 35; [2014] 1 WLR 4482

Introduction
Two recent appeals to the Privy Council from the Bermuda Court of Appeal have made an important contribution to the development of the law on cross-border insolvency. These two appeals, which were heard together, concerned attempts by the Cayman liquidators of companies in the Saad Group to obtain documents from the companies’ former auditors, PwC. In Singularis Holdings Ltd v PwC (the 'Singularis Appeal'), the Board considered the doctrine of modified universalism, and the majority held that there was a common law power to assist a foreign insolvency, but that the power could not be used to enable foreign liquidators to do something which they could not do under the law of the liquidation. In PwC v Saad Investments Co. Ltd (the 'Saad Appeal') the Board considered whether the Supreme Court of Bermuda had jurisdiction to wind up the company, and whether a stranger to the liquidation could challenge the winding up order after it had been made, holding that in exceptional circumstances, a stranger could challenge the winding up order, and that on the facts of the case the winding up should be stayed.

1. Factual background
Saad Investments Co. Ltd ('Saad') was incorporated in 1990 in the Cayman Islands.
By the time of its winding up, its authorised capital was USD 4 billion, of which USD 3.15 billion had been issued, almost all of it held by another Cayman Islands-based company, Saad Group Ltd. Singularis Holdings Ltd ('Singularis'), another member of the Saad group, was also incorporated in the Cayman Islands. In May 2009, the Saudi Arabian monetary authorities froze the Saudi assets of certain companies within the Saad group. As a result, the credit ratings of companies within the group, including Saad, were downgraded. This constituted an event of default under a facility agreement which had been granted to Saad by various banks. Consequently, repayment of all sums outstanding under the facility agreement was accelerated, and Saad became liable for a sum in excess of USD 2.8 billion. On 30 July 2009, a winding up petition was presented to the Cayman Grand Court by a creditor bank, based on Saad’s default in failing to pay this sum. On 5 August 2009, the Cayman Grand Court appointed Hugh Dickson, Stephen Akers and Mark Byers, of Grant Thornton Specialist Services (Cayman) Ltd (the 'Liquidators') as joint provisional liquidators of Saad. Six weeks later, they were appointed joint official liquidators when Saad was ordered by the Grand Court to be wound up.
The Liquidators claimed that upon investigating Saad’s records, they encountered what was 'a significant amount of uncertainty due in part to the complexity of its affairs, the position of the wider Saad group, and [certain] litigation'. However, they said that they were satisfied that 'there is a very significant deficiency, running into billions of US dollars, as regards creditors in the winding up of [Saad]'. They also described the liquidation as 'not only large but … complex', and requiring investigations ‘in multiple jurisdictions including the Cayman Islands, the United Kingdom, Saudi Arabia, Bahrain, Switzerland, Bermuda’ and many other countries, including the United States, France and the Channel Islands.