Stay of proceedings granted under Insolvency Act 1986 may have extra-territorial effect
By Chris Boyle
The High Court has held that in certain circumstances the European Insolvency Regulations 1346/2000/EC may effectively extend the jurisdictional reach of the English courts so as to grant a stay of proceedings not only in England but in other member states, having regard to section 130(2) of the Insolvency Act 1986. In these circumstances, the permission of the High Court that may be required before insolvency proceedings can be brought against the company in another member state in which the regulation applies (ARM Asset Backed Securities SA  EWHC 1097).
ARM Asset Backed Securities was a company incorporated in Luxembourg that invested funds (that it raised in bond issues) in the US life insurance market. ARM got itself into difficulties when it could not service and repay its bonds in full, which led the directors to submit a petition to the High Court for winding up of the company on just and equitable grounds (section 221(5) of the Insolvency Act)…
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