Samsun Logix wins stay from UK creditors

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Sandra Speares - Friday 13 March 2009

 

LONDON’s High Court has ordered a moratorium be imposed on Samsun Logix creditors in the UK, recognising the primacy of insolvency proceedings already underway in Korea.
Mr Justice Morgan made an order in the Chancery Division of the High Court giving recognition to the insolvency rehabilitation proceedings in Korea concerning the company. 
The embattled South Korean owner sought parallel bankruptcy protection in New York, after being granted similar protection by Seoul’s central district court. 
The Seoul-based company has estimated the number of its creditors as “between 200 and 999”, and said it has “more than $100m” in debt. 
According to law firm Birketts, who represented Samsun Logix in the UK legal action, the order was made in accordance with the United National Commission on International Trade Law model law on cross-border insolvency regulations, which was enacted into English law in 2006. 
Samsun is also seeking recognition of its own domestic insolvency process in a number of other jurisdictions, including the US, Singapore, Australia, China and Belgium, Birketts said. 
The UK recognition order was made within seven days of the start of the Korean rehabilitation  proceedings, “in accordance with the stated intention of the legislation that such applications should be dealt with by the court as a matter of urgency,” Birketts said. 
Lead partners on the case were Paul Matthews, head of commercial litigation and Nick Woo, head of shipping and international services at the Ipswich-based firm. 
The new insolvency rules mean companies that go bankrupt can apply in the UK for recognition of their own jurisdiction and obtain a stay. 
In giving recognition to the Korean proceedings, the court also granted an application that a general moratorium be imposed on all creditors of Samsun within the jurisdiction of the Cross Border Insolvency Regulations 2006. 
The moratorium is equivalent to that imposed on creditors of an English company that goes into administration. 
Mr Woo said the firm believed it was the first time the moratorium had been granted in this jurisdiction.
UNCITL adopted the model law on cross-border insolvency in December 1997. 
The law was designed to recognise the fact that national insolvency laws often did not cater for cross-border insolvency cases, and created jurisdictional issues that in turn created uncertainties that were a barrier to trade. 
A universal approach to cross border insolvency situations was deemed to be vital, as was co-operation between national courts. 
The regulations that came into force in England, Scotland and Wales, but not in Northern Ireland, in 2006 aimed to provide access to courts and the possibility of foreign representatives and creditors participating in insolvency proceedings in the UK. 
At the same time they provided for the possibility of co-operation with foreign courts in areas covered by the model law. 
According to guidance produced by law firm Freshfields Bruckhaus Deringer when the regulations came into force in Great Britain, the consequences of recognition would differ depending on whether the foreign proceedings were main proceedings or not. 
A main proceeding would be defined as a foreign proceeding taking place in the state where the debtor has the centre of its main interests.