In an order dated
According to Rule 311 of the RoP, proceedings in front of the UPC can be stayed for up to 3 months if one of the parties has been declared insolvent. The Court stated that Rule 311 must be interpreted in accordance with Article 41(3) UPCA, and found that a stay of proceedings was unjustified, now that a Decision on the appeal against the preliminary injunction was ready to be issued. This order was published on the same day that the
In its decision on staying proceedings, the Court reasoned that it would be against both procedural economy and the interests of the parties to delay the final decision, further stating that the majority of costs had already been occurred. The Court concluded that in such cases “If the decision or order has an effect on the insolvency estate, it does not differ from the effect that a decision or order issued before the declaration of insolvency would have had.” This is a clear demonstration of the Court acting in a commercial and economically minded way, and using its discretion to apply the rules of procedure in a way that best benefits both parties and the Court itself.
The Court also left open the question as to whether opening US Chapter 11 proceedings actually constitutes a declaration of insolvency, given that the aim of Chapter 11 proceedings is to provide a window of time during which the company can be restructured, and during which the company will mostly retain administrative and representative powers. It is possible that we can expect to see this question answered in a future case where Chapter 11 proceedings are entered by one of the parties before the case has been heard.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Marks & Clerk
Tel: 2074200000
Fax: 207836339
E-mail: nbutson@marks-clerk.com
URL: www.marks-clerk.com
© Mondaq Ltd, 2024 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source