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Manx Judge Clarifies Jurisdiction In Bankruptcy Case

Thursday, October 18, 2012

The Isle of Man's High Court of Justice has issued a ruling which clarifies to what extent Manx jurisdiction will be applied in cases involving multi-jurisdictional Manx businesses under solvency proceedings in other nations.

The defendant - Waste2Energy Group Holdings, a company incorporated under the laws of the Isle of Man, is part of a group of companies whose main centre of interests was in America and over which an American Chapter 11 trustee had been appointed by the United States Bankruptcy Court for the District of Delaware.

The claimant, Interdevelco Limited, a potential creditor of the defendant registered in Guernsey, had applied in the Isle of Man for the defendant to be wound up in the Isle of Man according to Manx law. However, in turn, the defendant applied for a declaration that the court should not exercise any jurisdiction it might have to try the claim for the winding up of the defendant in the Isle of Man.

In delivering his judgement that the principal insolvency proceedings should be in the United States, Deemster David Doyle cited three previous similar cases involving Manx law. The Deemster said there was no sense in having separate substantive winding up proceedings in the Isle of Man. Indeed, he opined that such duplication would cause additional and unnecessary expense, delay and inconvenience. The Deemster accordingly made a declaration that the court should not exercise the jurisdiction it had to try the claim.

The Deemster said: "There should in the circumstances of this case be one unitary and universal insolvency based in the US; the jurisdiction with which the group of companies including the defendant have close connections or to put it in other words 'the centre of their main interests' or their 'nerve centre'. The defendant and the other companies do not have any real substantive connection with the Isle of Man. They are simply incorporated here."

He continued: "That simple formal fact should not prevent the well advanced insolvency proceedings in the US from proceeding to their conclusion without additional substantive insolvency proceedings being commenced in the Isle of Man. There is nothing in Manx law or Manx public policy that requires this court to disregard the proceedings before the US Bankruptcy Court. This court should not seek to unravel or duplicate all the good work done by the US Bankruptcy Court."

"If the Claimant is a genuine creditor of the defendant then it should have nothing to fear from the proceedings before the US Bankruptcy Court which like insolvency proceedings in all sophisticated jurisdictions are designed to assist genuine creditors to obtain a fair share of the assets. The insolvency proceedings in this case should be permitted to proceed in the US. There is no need for additional substantive winding up proceedings to take place in the Isle of Man," the Deemster concluded.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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