German group restructures via a pre-pack administration and sidesteps need to change COMI or establish connection with the UK

German automotive group ATU has achieved a restructuring of its finances via a UK administration and pre-pack sale. The case is notable for the fact that the group had almost no connections with the UK — the majority of its debts were governed by New York law and the companies in its corporate structure were either incorporated in Germany or Luxembourg. Nevertheless, by incorporating an English company to purchase the assets of the group, it put itself into a position where it could obtain an administration order in the UK and sell its assets to a new group structure free of its existing liabilities. Carrying out the restructuring in this way meant that the group avoided the onerous task of transferring the headquarters functions of the group to the UK in order to change its centre of main interests (COMI).

The directors of Christophorus 3 (C3) applied to the High Court for an administration order and for approval of a pre-pack sale of its assets designed to restructure the debts of ATU.

The main operating company was a German company, ATU Handels. Handels held the shares of the individual operating entities. Handels was ultimately owned by a Luxembourg company via two intermediate holding companies incorporated in Germany…

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