Cape Intermediate Holdings - Case Update

The High Court has issued a landmark decision granting declaratory and injunctive relief against a receiver appointed by the state court in South Carolina, USA, concluding that the receivership “would not, should not and could not be recognised” in the UK because the company didn’t actually have a presence in the US.

The Cape group is a group of companies formerly involved in asbestos mining and distribution. The two entities that were the subject of the decision were: (1) Cape Intermediate Holdings Ltd (“CIHL”), the English company over which the receiver was purportedly appointed in South Carolina, although it was mistakenly referred to in those proceedings as Cape plc, and (2) Cape plc, a Jersey company which was joined because it has the same name as the subject company identified in South Carolina.

The receiver commenced proceedings in South Carolina on behalf of CIHL against CIHL’s parent company and subsidiaries. CIHL and Cape plc sought declaratory relief from the High Court as to the status of the receiver. The Court ultimately ruled that CIHL did not have a presence in South Carolina (or anywhere in the US for that matter) at the relevant time and that it had not submitted to the jurisdiction of South Carolina, meaning that there was no sufficient connection for the purposes of recognition of the South Carolina receivership.

The Court made clear that its function was not as some sort of appellate court in relation to the South Carolina receivership order, and “whatever its merits or demerits”, that order stands as an order of the Court of South Carolina.

The Court also noted that the Cross-Border Insolvency Regulation 2006 has no relevance in this case, since there is no relevant "foreign proceeding" in South Carolina within the meaning of that Regulation, because the South Carolina proceedings are not a collective judicial or administrative proceeding within those Regulations.

However, because the receiver was not actually seeking recognition of the receivership in the UK, the Court stated that its decision was not in the nature of an actual refusal of recognition. Rather, it was “a decision at a higher level to the effect that the receivership is not capable of recognition in this jurisdiction with the consequence that the receiver's acts should not be recognised for English law purposes.”

The decision can be accessed HERE.

Mark Phillips KC, Derrick Dale KC, William Willson, Angus Groom and Louise Merrett (instructed by Signature Litigation) for CIHL and Cape plc