- Stay of execution lifted given French pre-insolvency proceedings
- English stay considered to be otiose
The judgment follows on from two previous decisions in this matter – the first dealing with the substantive points of law (largely around unlawful dividends, breach of directors’ duties and transactions defrauding creditors) and the second dealing with the consequential relief to be granted (see our December and April updates for further details).
This judgment deals with the question of whether the stay of execution pending appeal, granted in favour of Sequana due to, in part, its precarious financial position, should be lifted.
Following the original judgments, Sequana entered into a French pre-insolvency proceeding (a sauvegarde proceeding) which imposed an automatic moratorium on all legal process against the debtor.
BAT argued, amongst other things, that the stay should be lifted under CPR 3.1(7) on the basis that the stay was otiose given the moratorium under the sauvegarde proceedings.
The court noted that one of the circumstances laid down by case law in which CPR 3.1(7) should be applied was where there has been a material change of circumstances since the order was made. The court held that the commencement of the sauvegarde proceeding constituted a material change of circumstances. As the English stay served no practical purpose in light of the change of circumstances, the stay was revoked.
The judgment demonstrates the interplay between a stay granted by the English courts and the impact of a foreign insolvency process.