In or around September 2008, Mr Hulme, who at that time was an employee of UBS made a presentation to Mr Markovic and to a Mr Raeder about an investment opportunity under the heading “Synergy Capital”. Concept Group Limited assisted in the setting up of the resulting corporate structure. A presentation was given by Mr Berry of Concept Group Limited and Advocate Ashton of the proposed structure to officers at the Guernsey Financial Services Commission with a view to exploring whether or not it fell within the regulatory framework. The conclusion reached appeared to have been that it was on the border of regulation but just outside, given that there were only four investors, but should the number of investors in the structure increase it would then fall within the regulatory framework.
On 11 December 2008, Ccay Limited, Crasygy Limited and Milmasy Limited entered into a partnership agreement (the Synergy Partnership). At this time the three partners were beneficially owned by Mr Hulme. Later on 22 December 2008, the share in Milmasy Limited was declared to be held in favour of Mr Markovic. Several payments were received by Milmasy Limited ordinarily as interest free, unsecured and repayable on demand loans, starting on 22 December 2008. The directors of Milmasy Limited resolved to accept each loan for investment purposes and resolved to make capital contributions to he Synergy Partnership. The Partners of the Synergy Partnership resolved to accept the capital contributions and resolved to make a unsecured, interest free and repayable on demand loan to Synergy Capital Limited. Mr Markovic claimed to have paid in the full amount of £8.5 million and the other parties did not question that claim, especially as the documentation showed the money passing through, or being treated as having passed through Milmasy Limited, in which Mr Hulme no longer appeared to asset any interest.
In January 2012, Concept Group Limited wrote to Mr Markovic enclosing invoices for £500 for the cost of the annual validation for Milmasy Limited and one third of the cost of the annual validation for Synergy Capital Limited because the bank accounts for each had been blocked by the bank. Later in February 2012, Quinn Emanuel Urquart & Sullivan UK LLP wrote to AFR Advocates, as lawyers for Milmasy Limited and Synergy Capital Limited, making a demand for immediate repayment by Milmasy of the £8,500,000 due to Mr Markovic. That demand was rejected. On 3 April 2012, Quinn Emanuel Urquart & Sullivan UK LLP again wrote to AFR Advocates for the money requested previously.
On 5 April 2012 Milan Markovic and UBS AG (the Applicants) jointly made an application pursuant to sections 406, 408 and 412 of the Companies (Guernsey) Law, 2008 (the 2008 Law) for the compulsory winding up of Synergy Capital Limited. It was asserted that Mr Markovic had standing to make the application as a creditor and/or “interested party” and that UBS had standing to make the application as an “interested party”.
On 18 April 2012, Synergy Capital Limited applied pursuant to section 412 of the 2008 Law and Rule 50(2)(e) of the Royal Court Civil Rules, 2007 for the dismissal of the winding up application on the grounds that the Applicants had no locus to bring it. On 19 April 2012, Mr Hulme made an application in terms that were substantively the same.
The Deputy Bailiff held that in the absence of any applicant definition of “creditor” in the 2008 Law, the word could be given its ordinary meaning as being a person to whom a debt is payable. The Court held that Mr Markovic did not have standing as a creditor to make the winding up application as there was not a debtor-creditor relationship between Mr Markovic and Synergy Capital Limited, and to do so would ignore the structure that was created.
The Deputy Bailiff also held that an “interested party” must be a person who is interested in the company in respect of which the application is being made and that interest must be treated as something broadly equivalent to, but distinct from, the interests of the persons actually specified in the legislation. However, the Deputy Bailiff added that it will be necessary to have regard to all the circumstances in which an applicant for a winding up order claims to have links to, and so an interest in, the company in question entitling it to being the application. The basis of the person’s interest in the company will need to be assessed against the touchstone of whether an appropriate degree of connection or association with the company exists so as to warrant the person taking steps to bring about its dissolution.
The Court held that the position of UBS, as Mr Markovic’s bank, was too remote from Synergy Capital for it be to an “interested party” and so able to make a winding up application. UBS was simply a correspondent with Synergy Capital Limited and it would be casting the net too wide to afford such a person standing to make a winding up application.
However, the position of Mr Markovic was quite different. Synergy Capital Limited was part of a structure created with Mr Markovic in mind. The Synergy Partnership lent money to Synergy Capital Limited. As one of the partners, Milmasy could make a demand for repayment. If Milmasy were to appoint a liquidator, the Synergy Partnership would be bankrupt (and would be dissolved). If the Synergy Partnership were dissolved, Milmasy’s position in respect of Synergy Capital Limited would potentially become more direct. In addition, the evidence pointed to Milmasy effectively being the alter ego of Mr Markovic and the funding he provided to that company could have been provided directly to Synergy Capital Limited. Accordingly, the Court held that Mr Markovic’s interest in the company was as close as anyone else could get and decided that his application for the compulsory winding up of Synergy Capital Limited should be allowed to proceed to a substantive hearing.