The Supreme Court dismissed an appeal over the winding up of Eurofood IFSC Limited, holding that the High Court’s appointment of a provisional liquidator opened the main insolvency proceedings in Ireland before proceedings in Italy.
The judgment, delivered by Fennelly J on 3 July 2006, followed a ruling by the European Court of Justice on questions referred by the Supreme Court. The appeal was from a High Court order made by Kelly J on 23 March 2004 to wind up Eurofood. A provisional liquidator had been appointed by Lavan J on 27 January 2004.
The European Court ruled that an insolvency decision for the purposes of the EU Insolvency Regulation involves the debtor losing management powers over its assets and the appointment of a liquidator listed in the Regulation. It also said that the first court to open proceedings has priority, and that other member states must recognise those proceedings without reviewing the opening court’s jurisdiction. Recognition may be refused where proceedings were opened in flagrant breach of the right to be heard.
Fennelly J said the High Court’s appointment and the resulting divestment of Eurofood’s management powers met that test. The Supreme Court therefore treated the Irish proceedings as the first main insolvency proceedings. It rejected appellant Dr Enrico Bondi’s submissions that the Irish proceedings should be treated as territorial or secondary proceedings, and that the court should recognise decisions made in Italy concerning Eurofood’s insolvency and centre of main interests.
The court said Bondi had not taken steps in the High Court to challenge the ex parte provisional-liquidator appointment and had not appealed that order. It said the Supreme Court could not interfere with an order that was not before it on appeal. It also rejected the argument that a later European Court ruling about a debtor moving its centre of main interests changed the validity of the 2004 appointment.
The Supreme Court said the European Court’s ruling had settled the applicable test for determining a company’s centre of main interests. It found Kelly J’s judgment consistent with that interpretation. As a result, it was unnecessary to decide whether recognition of the Parma Court’s decision should be withheld for a breach of fair procedures, though Fennelly J said he would have affirmed Kelly J’s decision on that issue if necessary.
The order was to dismiss the appeal. The winding-up order remained in place.