“i) A five year senior loan of Eur1.6 billion to Ramblas through a syndicate of banks headed by Royal Bank of Scotland ("the senior loan"). The senior loan could be accelerated on the occurrence of certain events. ii) A junior debt for Eur200 million from Royal Bank of Scotland to Ramblas ('the junior loan”). This was secured by, amongst other things, (a) a pledge executed by Mr. Maud and Mr. Quinlan over their shares in Ramblas in favour of RBS; (b) a pledge executed by Ramblas over its shares in Delma; and (c) a limited personal guarantee from Mr. Maud and Mr. Quinlan ("the personal guarantee"). This personal guarantee from Mr. Maud and Mr. Quinlan was secured by a number of instruments, the most relevant one for our purposes being a charge given by Mr. Quinlan in favour of RBS over shares and loan stock that he owned (directly or indirectly) in Coroin Ltd (his "Coroin stake"). iii) A personal loan made to Mr. Maud and Mr. Quinlan by RBS for Eur75 million and then loaned on by them to the Marme Group ("the personal loan"). Mr. Maud and Mr. Quinlan were jointly and severally liable on this loan. This loan was also secured by a number of instruments, again the most relevant one for our purposes being the charge given by Mr. Quinlan in favour of RBS over his Coroin stake.”
“[Mr. Maud’s] belief is that terms were agreed between the Barclay Brothers, Mr. Quinlan and [Aabar and Edgeworth] that in consideration of Mr. Quinlan agreeing to hold the economic interest in his shares in Ramblas for the benefit of [Aabar and Edgeworth] (and exercising his shareholder rights in accordance with their instructions) [Aabar and Edgeworth] agreed not to enforce their security over Mr. Quinlan's Coroin stake or to exercise their right under the equity of redemption in relation to the security held by the Barclay Brothers over Mr. Quinlan's Coroin stake. As a result of this, he says, [Aabar and Edgeworth] have obtained "effective control" over half the shares in Ramblas without a formal transfer of the shares, thereby avoiding the triggering of the pre-emption rights in Mr. Maud's favour as the co-shareholder in Ramblas.”
“It should be noted that the articles of association of Ramblas contain preemption provisions which provide that before any shareholder can transfer his shares he must first offer to sell them to the other shareholders and, further, that any shareholder who is made bankrupt must offer his shares to the other shareholders. This is significant because, as I explain below, the Petitioners’ purpose in presenting the Petition is to try to trigger these provisions such that I am required to offer my shares for sale to [Mr. Quinlan] who has entered into agreements with the Petitioners under which they contend that he will then be forced to sell both his and my shares to the Petitioners.” “It should be noted that the articles of association of Ramblas contain preemption provisions which provide that before any shareholder can transfer his shares he must first offer to sell them to the other shareholders and, further, that any shareholder who is made bankrupt must offer his shares to the other shareholders. This is significant because, as I explain below, the Petitioners’ purpose in presenting the Petition is to try to trigger these provisions such that I am required to offer my shares for sale to [Mr. Quinlan] who has entered into agreements with the Petitioners under which they contend that he will then be forced to sell both his and my shares to the Petitioners.”
“Thus it is clearly intended by the parties to the Deed that the constant threat of facing a bankruptcy petition in respect of his Marme debts should hang over Mr. Quinlan's head to encourage him to comply with his obligations under the Deed and not to switch his allegiance.”
“There is plenty of debt around. Where there is support is for the sovereign wealth funds or the big corporates- financial institutions want to deal with these institutions. So I have been working on partnerships with governments, because they can bring the equity and stability. The first deal was Santander, and we did that with the government of Abu Dhabi, and we’re looking for more.”
“He is referring to the purchase of the Madrid headquarters of Spanish bank Santander which was executed in conjunction with Aabar, an Abu Dhabi investment fund. Entrepreneurs Derek Quinlan and Glenn Maud bought the property for€1.9bn in 2008 with€1.55bn of senior debt and€200m junior debt from the Royal Bank of Scotland. Tchenguiz and Aabar bought the junior loan and took advantage of covenant breaches to gain control of the asset last year….The deal with Quinlan and Maud was consensual.”
“However, despite Mr. Tchenguiz’s efforts I have had productive discussions with Aabar which resulted in my reaching an agreement with Aabar for me to purchase its claims against me and also certain debts owed to it by Edgeworth which would have enabled me to preserve my equity interest. However as a result of Mr. Tchenguiz’s subsequent interference Aabar has reneged on this agreement and I have therefore brought proceedings seeking specific performance in the Commercial Court. If those proceedings are successful then I will be in a position to cause the Petition to be discontinued as I will own Aabar’s claim and have a complete defence to Edgeworth’s claim through my rights against it purchased from Aabar…..” “However, despite Mr. Tchenguiz’s efforts I have had productive discussions with Aabar which resulted in my reaching an agreement with Aabar for me to purchase its claims against me and also certain debts owed to it by Edgeworth which would have enabled me to preserve my equity interest. However as a result of Mr. Tchenguiz’s subsequent interference Aabar has reneged on this agreement and I have therefore brought proceedings seeking specific performance in the Commercial Court. If those proceedings are successful then I will be in a position to cause the Petition to be discontinued as I will own Aabar’s claim and have a complete defence to Edgeworth’s claim through my rights against it purchased from Aabar…..”
“The first is under r 6.5(4)(b) because he contends that the debt has already been satisfied in full by Mr. Derek Quinlan who was jointly and severally liable with Mr. Maud for the original debts which were the subject of the judgment. He argues that the evidence he has put forward raises an arguable case that his liability for the original debt and hence for the judgment debt has been extinguished. Whether this is in fact what has happened is a matter which, he submits, needs to be explored at a trial and for present purposes this constitutes a substantial dispute as to whether the debt is still due. His second ground is that the statutory demand ought to be set aside because the Respondents are pursuing a collateral purpose by serving this statutory demand. That purpose is to trigger pre-emption rights set out in the articles of association of a company which is at the moment jointly owned by Mr. Maud and Mr. Quinlan and of which the Respondents wish to gain control.”
“The Petitioners are not seeking to have me made bankrupt because they believe it is in the interests of my creditors as a whole (or in their interests as one of my creditors) but rather because they intend to try to benefit from the triggering of provisions in the articles of association of Ramblas…and by preventing me from bidding for the assets owned by the Marme Group…….My interests in the Marme Group are my only significant asset and by seeking a bankruptcy order against me the Petitioners hope to obtain these for themselves to the detriment of my creditors. The Petitioners did not dispute that this was their purpose in the proceedings to set aside the Demand and it is plain that this is their purpose…..”
“Yesterday,29 October 2015 , the ruling approving the Liquidation Plan and the Individual Liquidation Plan of Ramblas, (which is supplementary to the Liquidation Plan), was issued by the Spanish Court and notified to the parties. Further rulings approving the Liquidation Plan and Individual Liquidation Plans in the Delma and Marme proceedings have also been issued….. I understand that the ruling approves the Insolvency Administrator’s Liquidation Plan proposal in its current terms and therefore approves the process [for sale] except for the following amendments or clarifications: (a) As previously clarified by the Insolvency Administrator’s writ, the term to submit bids or improve existing bids will be 15 Court days. The Court states that this term is reasonable and adequate to ensure the protection of all parties’ interests, as well as in order to maximize the value of the Assets. (b) For those that have to date already submitted bids in the Liquidation process ….they have 15 days to amend their offer to ensure that it complies with the terms of the Liquidation Plan. However, I am advised that the ruling states that any terms of the 30. Liquidation Plan that are contrary to the payment waterfall according to Spanish law will be disregarded. I understand from my Spanish advisors that the payment waterfall contained within the Liquidation Plan is not fully compliant with Spanish law, in that certain creditors who rank at the same level as other creditors would be paid in preference of those other creditors. I am advised by my Spanish and English legal advisors that this would be similar to one creditor being paid in preference of another where both of those creditors rank pari passu. 31. In addition, the ruling includes the following observations, that I am advised may be relevant for the purpose of the Petition: a. The assets contained within the Marme Group are considered to be a “production unit” as a whole for the purpose of the Spanish Insolvency Law. I am advised that this is designed to ensure that the business continuity of the Marme Group, and in particular the lease arrangements with Banco Santander, are not adversely affected by the sale process…….. b. The shareholders of Ramblas (i.e. myself and Derek Quinlan) shall be treated like any other creditor as regards their rights and obligations to submit offers and should not be discouraged to do so, given their interest in increasing and maximising the price of the Santander Asset. c. Aabar and Edgeworth are not entitled to credit bid with the contingent credits that they have within the finance structure of the Santander Asset (i.e. those relating to the UFA) until those claims have been the subject of a Court order and are therefore liquidated debts.”
“Having heard expert evidence on the issue whether Article 97.2 operates to extinguish the Guarantee as a guarantee granted by a third party I am fully satisfied that Article 97.2 does not so operate.”
“Mr. Maud has disclosed a decree nisi dated24 May 2012 , but finally confirmed during the July Examination that no decree absolute has been entered and therefore no financial settlement has been reached between him and Mrs. Maud. Until Mr. Maud was forced to disclose the fact that no decree absolute has been entered as a result of theCPR 71 proceedings, Mr. Maud had been continually referring to Mrs Maud as his “ex-wife” (see, for example paragraph 80(g) of Maud 2 and the email dated1 August 2013 referred to above). This is a mischaracterisation that is also adopted by Mr. Heinz where he describes Mr. and Mrs. Maud as being “divorced” in paragraph 7 of Heinz 1.” 38.4. Mr. Maud admitted during the oral examination that after the transfer of Wilton Crescent he spent£6 million on improvements; 38.5. Mr. Maud said during his second examination “I have just said that through Maud & Newett investments alone last year I had£873,000 ….And that does not take account of any other income…….my tax returns are in a nearly completed form but I am not able to at the moment to discharge the fees that I need to pay Price Waterhouse Coopers to complete those accounts and file them” and that “during the period you refer to, yes, my expenditure…is 750,000, yes. But I can tell you that my income, my drawings from MNI during that period are, I believe, 873,000, so maybe that gives you some explanation [of my expenditure]”; 38.6. Mr. Maud is the joint legal proprietor of Bents House in Sheffield, together with his wife; 38.7. Pursuant to the 2007 deed, Mr. Maud agreed, in full and final settlement of his financial obligations under the 2006 deed, to hold a property known as Chalet Grittihof in Switzerland on trust for Mrs. Maud. Ms. Roscoe in her witness statement states: “when it becomes legally possible for Patricia to own real estate in Switzerland he will…on demand transfer all his interest in Chalet Grittihof to 41. Patricia”
“The Court has a general power, if it appears to it appropriate to do so on the grounds that there has been a contravention of the rules or for any other reason, to dismiss a bankruptcy petition or to stay proceedings on such a petition; and where it stays proceedings on a petition, it may do so on such terms and conditions as it thinks fit.”
“the Court retains its old jurisdiction to refuse to make a man bankrupt for an improper purpose, and to annul an adjudication when the justice and the convenience of the case require it.”
“[72] I come finally to the question of discretion, and whether the Chief Registrar should have granted a further adjournment. There is no doubt that the Court retains a discretion not to make a bankruptcy order, even where the petition debt has been clearly established and any grounds of opposition have been dismissed. However, the authorities establish that in such circumstances the discretion to adjourn should only be exercised if there is a reasonable prospect of the petition debt being paid in full within a reasonable period: see Harrison v Seggar[2005] EWHC 411 (Ch) ,[2005] BPIR 583 , at para [7] per Blackburne J, and Re Gilmartin (ABankrupt)[1989] 1 WLR 513 , at 516F– G, per Harman J. Furthermore, as Blackburne J said, “[t]here must be credible evidence to support such a prospect if the Court is to grant an adjournment for payment”. [73] Accordingly, the first question is whether there was credible evidence before the Chief Registrar on 20 July to establish a reasonable prospect that the petition debts would be paid in full within a reasonable time. In my judgment there was not. In the context of the long-drawn out history of the petitions, and the adjournments which had already been granted, it seems to me that a reasonable time for payment in full of the petition debts could have been no more than a further 2 or 3 months at the most. There was no credible prospect of payment being received within such a timescale, because the offer of security contemplated that nothing would probably happen for at least 6 months, and the terminal loss claims were still inchoate and unsupported by any draft accounts. In view of the past history of delay and broken promises, it was in my judgment appropriate to take a fairly hard line and to accord priority to HMR.C's undoubted prima facie right to obtain bankruptcy orders over protestations that a further adjournment might finally yield the payment in full which had so signally failed to materialise in the past. Furthermore, the Court would in my opinion have been justified in harbouring a suspicion that the predominant purpose of the adjournment, from the debtors' point of view, was to enable them to realise their assets at a time of their choosing in a difficult property market.”
“It was suggested that there is an onus on the petitioning creditor to justify the making of a winding-up order, but I am not sure that the concept of an onus can easily be applied to a case in which the discretion requires a number of matters to be taken into account. One of these must certainly be the number, value and quality of the creditors who favour a winding-up order as against those who do not. In this case the numbers are equal, but the quantity of the debts of those who favour a winding-up is very considerably greater than those who do not. In addition, it is, I think, proper to discount the opposition of those opposing creditors who are clearly associated with the management of the company.” of the company.”
“Imagine that you own a lake. There are fish in the lake. You are the only one who has the right to fish in that lake, and no one constrains your decision as to how much fishing to do. You have it in your power to catch all the fish and sell them for, say,$100,000 . If you did that, however, there would be no fish in the lake next year. It might be better for you- you might maximize your total return from fishing- if you caught and sold some fish this year but left other fish in the lake so that they could multiply and you would have fish in subsequent years. Assume that, by taking that approach, you could earn (adjusting for inflation)$50,000 each year. Having this outcome is like having a perpetual annuity paying$50,000 a year. It has a present value of perhaps$500,000 . Since (obviously, I hope) when all other things are equal,$500,000 is better than$100,000 , you, as sole owner, would limit your fishing this year unless some other factor influenced you. But what if you are not the only one who can fish in this lake? What if a hundred people can do so? The optimal solution has not changed; it would be preferable to leave some fish in the lake to multiply because doing so has a present value of$500,000 . But in this case, unlike that where you have to control only yourself, an obstacle exists in achieving that result. If there are a hundred fishermen, you cannot be sure, by limiting your fishing, that there will be any more fish next year, unless you can also control the others. You may, then have an incentive to catch as many fish as you can today because maximising your take this year (catching on average$1,000 worth of fish) is better for you than holding off (catching say only$500 worth of fish this year) while others scramble and deplete the stock entirely. If you hold off, your aggregate return is only$500 since nothing will be left for next year or the year after. But that sort of reasoning by each of the hundred fishermen will mean that the stock will be gone by the end of the first season. The fishermen will split£100,000 this year, but there will no fish- and no money- in future years. Self-interest results in their splitting$100,000 , not$500,000 . What is required is some rule that will make all hundred fishermen act as a sole owner would. That is where bankruptcy law enters the picture in a world not of fish but of credit……Bankruptcy provides a way to make these diverse individuals act as one, by imposing a collective and compulsory proceeding on them.”
“…..on a petition in the Companies Court, in contrast with an ordinary action, there is not a true lis between the petitioner and the company which they can deal with as they will. The true position is that a creditor petitioning the Companies Court is invoking a class right…..and his petition must be governed by whether he is truly invoking that right on behalf of himself and all others of his class rateably, or whether he has some private purpose in view. It has long been the law that a petition presented for the purpose of putting pressure on the company is not properly presented…..”
"The question, therefore, is not 'does the Petitioner genuinely wish to wind up this company', as counsel for the Petitioner . . . submitted. It would be hard for me to find that this Petitioner, which has taken all regular steps to prosecute its petition and which plainly has reasons to desire the winding-up of this company, since that must put beyond much cavil the future of the company's lease, does not in truth desire to wind up the company. In my judgment the true question is 'for what purpose does the Petitioner wish to wind up this company'. A judge has to decide whether the petition is for the benefit of the class of which the Petitioner forms a part or is for some purpose of his own. If the latter, then it is not properly brought. If the Petitioner can show that he and his class stand together and will benefit or suffer rateably, then his ill motive is nothing to the point. But here it is plain that no such even-handedness exists. If the petition is properly brought, then the Petitioner stands to get a valuable asset for itself and the rest of the class of creditors are likely to get nothing."
“Although a petitioning creditor may, as between himself and the company, be entitled to a winding up order ex debito justitiae, his remedy is a ‘class right’, so that, where creditors oppose the making of an order, the Court must come to a conclusion in its discretion after considering the arguments of the creditors in support and of opposing the petition…..”
“It is plain from the well-known authorities on the subject that, where there are some creditors supporting and others opposing a winding-up petition it is for the Court to decide as a matter of judicial discretion, what weight to attribute to the voices on each side of the contest.”
“No doubt, anything done or proposed by the debtor designed to secure for him, in the bankruptcy, more than his proper share of the assets would be vicious and tainted.”
“The whole principle of bankruptcy is that when an act of bankruptcy has been committed there shall be a fair distribution between all creditors….”
“Counsel for the debtor conceded in his reply that the rule as to extortion which he sought to invoke did not rest on any such general proposition as above suggested, namely that a creditor invoking or threatening to invoke the bankruptcy jurisdiction was irrevocably committed to equal distribution in all circumstances.”
“The so-called “rule” in bankruptcy is, in truth no more than an application of a more general rule that the Court proceedings may not be used….for the purpose of obtaining for the person so using…them some collateral advantage to himself, and not for the purpose for which such proceedings are properly designed and exist.”
“I would hold that a creditor is prima facie entitled to his order so as to shift the initial burden to those who oppose the winding up; the petitioner does not have to demonstrate positively that an order for winding up is for the benefit of the class of 13 creditors to which he belongs, but, if issue is joined on the matter, and a case made that the petition is not for that purpose but for an ulterior, though not itself improper object, then the burden shifts back to the petitioner.”
“23. In my view, the ratio decidendi of the judgment of McCracken J. in Re Genport Ltd. is to be found in the last paragraph (para. 10) of the judgment in which he stated: “Accordingly, while neither might in itself be decisive, in my view the combination of the ulterior, although not necessarily improper, motive and the fact that a winding-up may not be of any real benefit to the ordinary creditors are sufficient to persuade me to exercise my discretion in refusing to make the winding-up order.”
“Subject to the fulfilment of what is provided for in Section 10 above being satisfied and simultaneously with the completion of the Acquisition, and in addition to the Offer Price, the Consortium will procure that any sum required to discharge Glenn Maud from his liability under the Personal Loan is either paid to the Junior Lenders [now Aabar and Edgeworth] or is deposited in the High Court in England pending the conclusion of the litigation between Mr. Maud and the Junior Lenders as to the Junior Lenders’ proper entitlement under the Personal Loan.”
“….our client filed a Liquidation plan in May 2015. However numerous stakeholders in the Liquidation (including Linklaters’ clients) filed objections to the Liquidation plan. Definitive Court approval for a plan is therefore unlikely to be achieved for some considerable time, particularly considering that any Judge’s decision approving the plan may be appealed.”