28/03/2024Updates to the Financial Promotion Order for HNWIs and SCSIs
This piece contains a summary of the changes to be brought about by the… Read more
28/02/2019
Lady Moon SPV SRL v Petricca & Co Capital Limited [2019] EWHC 439 (Ch)
Memery Crystal client Petricca & Co Capital Limited succeeds in complex cross-border insolvency jurisdiction battle relating to a collective investment undertaking.
Memery Crystal acted for Petricca & Co Capital Limited, a London-based fund manager, in its successful application to challenge the jurisdiction of the English Court to determine at trial, CPR Part 8 proceedings, commenced by an Italian fund creditor, Lady Moon SPV SRL, an Italian SPV owned or managed by Cerberus.
In judgment, the Court analysed the applicable EU legislation relating to insolvency in the context of collective investment undertakings, the so-called “dovetailing principle” and arguments on forum non conveniens before finding in favour of Petricca and staying the proceedings.
Background
Lady Moon, an Italian SPV owned or managed by Cerberus, and one of the creditors of an Italian investment fund (an Orizzonte Fondo Comune d’Investimento Alternativo di Tip Chiuso e Riservato) (the “Fund”), commenced CPR Part 8 proceedings against Petricca, a London based fund manager in September 2018. Pursuant to CPR Part 64, Lady Moon sought directions that Petricca as the Fund’s “trustee” should wind-up the Fund, which it alleged should be treated as a trust, or sell its assets. Petricca issued an application under CPR Part 11 to challenge jurisdiction in October 2018. Prior to the making of the claim, Lady Moon had commenced Italian proceedings to enforce its rights to be paid as a secured creditor. It was common ground that the Fund was governed by Italian law and that its assets and creditors were all located in Italy.
Issues in question
The issues before the Court included, by way of summary, whether:
The Judgment
In judgment, the Court held that Lady Moon had mis-interpreted the relevant EU rules. The fact that the regime of EU regulation expressly leaves collective investment undertakings (COUs), like the Fund, to national supervision and regulation does not mean that proceedings to wind COUs up as insolvent are outside the Insolvency Exception. It did not create any gap or overlap in the EU regulatory regime for the purposes of the “dovetailing principle” (by which it is presumed that EU legislation is intended to cover an entire subject without gaps or overlap). The Part 8 proceedings were clearly within the Insolvency Exception.
On the question of forum non conveniens, the Court declined to exercise its jurisdiction and stayed the proceedings in favour of the Italian Courts applying the test in Spiliada Maritime Corporation [1987] 1 AC 460 on the basis that Italy was an available forum expressing that “An Italian forum must be what the Unitholders and creditors bargained for”. In doing so the court observed “a strong whiff of old-fashioned forum shopping and even potential oppression about its [Lady Moon’s] position.” Allied to this the Court held that if the Recast Judgments Regulation had been held to apply to the Part 8 Claim (which it did not), it would in any event have stayed the proceedings under Article 29 of that regulation (Lis pendens – related actions) by reference to the prior Italian proceedings.
The Memery Crystal team advising Petricca was led by Dispute Resolution Partner Joel Seager, along with Head of Banking and Finance and Partner Matthew Lindsay, Senior Associate Nikola Lowry-Lee and Trainee Solicitor Aoife Marrett.
Memery Crystal instructed Stephen Atherton QC and James Mather from 20 Essex Street and Serle Court.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
This piece contains a summary of the changes to be brought about by the… Read more
On 26 October 2023, The Economic Crime and Corporate Transparency Act 2023 (the “ECCTA”) received… Read more
The Digital Markets, Competition & Consumer Bill (“DMCC Bill”) currently before Parliament is aimed at… Read more
There are two key changes to the financial promotion regime to address. The FCA has… Read more