In a closely-watched case stemming from the demise of the Australian HIH insurance group, the UK House of Lords has ruled in McGrath & Anor & Others v Riddell and Others [2008] UKHL 21 that the English assets of four companies in that group, which are in liquidation in Australia and in ancillary insolvency proceedings in England, must be remitted to Australia for distribution under Australian insolvency law. It was accepted that such a move would benefit some creditors but harm others as the distribution of assets under the Australian insolvency regime will provide a different outcome for creditors to one under the English regime This was rejected, however, as necessarily being a sufficiently good reason to prevent such remittance.
This ruling will have a direct bearing on multinational insolvency proceedings making it easier for foreign liquidators to obtain and distribute the English assets of foreign companies. This is likely to mean that there will be fewer instances of large company insolvencies being administered in both their country of origin and in the UK. Instead, such companies will be administered under a single system, that of the location of the principal insolvency proceedings.
