This case is significant as it involved the appointment of an Examiner to Norwegian Air Shuttle ASA (NAS) a company incorporated in Norway with its centre of main interests in Norway rather than Ireland.
The Norwegian Air Group comprised 65 companies and the protection of the Court was sought in respect of 5 Irish incorporated companies (the Petitioners) and NAS the ultimate parent company in the Group.
The global grounding of the Boeing 737 Max in 2019 and the Covid Pandemic had caused severe financial damage to the Group. It had carried out restructuring in 2020 and availed of Norweigan Government state aid which provided the Group with the ability to maintain a 'hibernation mode' until the end of March 2021, provided the protection of the Irish Courts under the examinership process was achieved.
NAS as a Related Company
In the case of the Irish incorporated Petitioners, pursuant to the EU Insolvency Regulation (Regulation (EU) 2015/848 of 20 May 2015 on insolvency proceedings (recast) (the Regulation) which sets out conflicts of law rules for insolvency proceedings concerning debtors based in the EU with operations in more than one member state, the Court found it had jurisdiction to open "main insolvency proceedings" in respect of the five Petitioners.
In the case of NAS, given that this was incorporated in Norway (which is not an EU Member State) the Regulation did not apply. The Court had to consider its jurisdiction pursuant to section 517 of the Companies Act 2014 (the Act) which provides that where the court appoints an examiner to a company it may also make an order appointing the examiner as examiner of a related company.
In considering whether or not NAS constituted a "related company" for the purposes of the relevant section the Court noted that:
- Section 2(10) of the Act defines related companies to include a company which is a "holding company or subsidiary" of a company and NAS was a holding company of the Petitioners.
- Section 2(11) of the Act provides that for the purposes of section 2(10) the term "company" includes any body that is capable of being wound up under the Act;
- Section 1328 of the Act provides for the winding up of unregistered companies, ie companies not registered under the Act.
The Court noted that the jurisdiction of the Court to make an order for the winding up of a non – Irish company was considered by Laffoy J. in Re Harley Medical Group (Ireland) Limited [2013] 2 IR 596. In that case Laffoy J had quoted from Courtney, The Law of Companies, where he summarised the relevant jurisprudence: -
"In Stocznia Gdanska SA v Latreefers Inc….the English Court of Appeal endorsed the finding of Lloyd J. that as the law has evolved there are three core requirements before a court will exercise its discretion to order the winding up of an unregistered company:
- There must be sufficient connection with England and Wales which may, but does not necessarily have to, consist of assets within the jurisdiction;
- There must be a reasonable possibility if a winding up order is made, of benefit to those applying for the winding up order;
- One or more persons interest in the distribution of the assets of the company must be persons over whom the court can exercise jurisdiction"
The Court noted that the test of a "sufficient connection" endorsed by Laffoy J. in Re Harley Medical Group (Ireland) Limited (for the purposes of the winding up of a non-Irish company) was the starting point as to the jurisdiction of the Court to appoint an examiner to NAS as a related company.
Applying the test, the Court noted that "it is clear that the commercial operations of the Group taken together with the range of legal transactions entered into by both NAS and its subsidiaries are so closely linked and interdependent that NAS has a real and deep connection to the State and meets the test of a sufficient connection"
Recognition of proceedings in Norway
The principles in Stocznia v Latreefers Inc include a consideration as to whether an order of the court will bind parties intended to be affected, as otherwise the appointment of an Examiner by the Irish court would be pointless. An opinion of Norwegian counsel was provided as part of the proceedings that a successful examinership process in Ireland would be capable of recognition in Norway. The opinion further opined that, if necessary, NAS could open separate reconstruction proceedings in Norway to fend off creditors seeking to bypass the Irish moratorium on claims resulting from the examinership and that in such a case, the "reconstructor in Norway" would probably coordinate his process with the Irish examinership. Evidence was given as part of the proceedings that the board of NAS proposed to apply to court in Norway to have NAS placed in a restructuring process there. The process would continue in parallel with the examinership but it was envisaged that the examinership would be the primary process with regard to NAS and once the Irish examinership concluded an order would be sought if necessary to give effect to those proposals as part of the Norwegian process.
Reasonable prospect of survival
On the test of "reasonable prospect of survival" ultimately the Court found that the Petitioners had a reasonable prospect of survival as a going concern and further that NAS had a sufficiently close connection with the State to qualify as a related company for the purposes of s.517 of the Act and that it had a reasonable prospect of survival as a going concern (and that the appointment of an Examiner to NAS was likely to facilitate the survival of NAS and the Petitioners). Accordingly, the order appointing the Examiner to the Petitioners and to NAS was made.
Schemes of arrangement
The judgment outlined above was delivered in November 2020. Subsequently, on 26 March 2021 the High Court approved the schemes of arrangement put forward by the Examiner
