Maud v Aabar Block S.a.r.L Edgeworth Capital (Luxembourg) S.a.r.L.

This is an expedited application for permission to appeal, with appeal to follow if permission is granted, against a bankruptcy order made by Mr. Registrar Briggs on 3 June 2016 in respect of the appellant, Mr. Glenn Maud (“Mr. Maud”). The bankruptcy order has been stayed pending determination of this application as a result of an order that I made on 2 June 2016: see [2016] EWHC 1319 (Ch).

The background to the bankruptcy proceedings is both complicated and unusual. The petition is merely one aspect of a wider set of proceedings in England and Spain which have at their heart the arrangements for the financing and ownership of a group of Spanish and Dutch companies known as “the Marme Group” that owns a very substantial office and real estate complex in Boadilla del Monte, Madrid. That complex has been let on a long lease to a company in the Santander Banking group and houses the international headquarters of Banco de Santander. The complex is known locally as “the Financial City” and the asset that it represents has been referred to throughout the proceedings as “the Santander Asset”. On any view, it is an asset of substantial value worth several billion euros.

The parent company of the Marme Group which owns the Santander Asset is owned in equal proportions by Mr. Maud and a business associate of his, Mr. Derek Quinlan (“Mr. Quinlan”). The companies in the group are, however, heavily indebted as a result of incurring the finance for the acquisition of the Santander Asset, and they have entered insolvency proceedings in Spain. In the course of those proceedings, the Spanish court has approved a liquidation plan under which the assets of the group – principally the Santander Asset - will be sold to the highest bidder with a view to repaying the debts of the Marme Group and (possibly) returning some value to its shareholders.

Although others may also be interested in acquiring the Santander Asset, for present purposes the main protaganists who have submitted rival bids to the Spanish insolvency administrators have been (on the one side) Mr. Maud and a number of investment companies with which he formed an alliance, including in particular a private equity firm based in California called Global Asset Capital Europe LLC (“GAC”) and a London-based investment firm called AGC Equity Partners (“AGC”); and (on the other side) the two creditors who have petitioned for Mr. Maud’s bankruptcy, namely Aabar Block S.a.r.l. (“Aabar”) and Edgeworth Capital (Luxembourg) S.a.r.l. (“Edgeworth”). Aabar is an investment company which is financed and controlled by the Abu Dhabi sovereign wealth fund. Edgeworth is an investment company advised by Mr. Robert Tchenguiz, who is a property entrepreneur. Where appropriate, I shall refer to Aabar and Edgeworth collectively as “the Petitioning Creditors”.

In order that the arguments on the appeal can be understood, it is necessary to provide at least an outline of the complex ownership structure of the Santander Asset and the twists and turns of the Spanish insolvency and the English litigation to which I have referred. In so doing I do not propose to refer to every detail of the proceedings and the voluminous documentation that has been generated over the last several years.

The Santander Asset was originally acquired in September 2008 by the Marme Group which consists of three companies. The Santander Asset was owned and operated by a Spanish company, Marme Inversiones 2007 S.L. (“Marme”). Marme was and is wholly owned by a Dutch company, Delma Projectontwikkeling BV (“Delma”), which in turn was and is wholly owned by another Dutch company known as Ramblas Investments BV (“Ramblas”). One half of the shares in Ramblas were and are registered in the names of each of Mr. Maud and Mr. Quinlan.

The acquisition of the Santander Asset was financed by a number of loans agreed on 12 September 2008:

In September 2010 Mr. Maud and Mr. Quinlan made late payment of interest on the Personal Loan, which entitled RBS to accelerate the loan and make demand for its repayment. RBS, which had its own difficulties at the time, made such demand on 19 September 2010. This produced only a partial repayment of €25 million.

It was at this stage that Aabar and Edgeworth appeared on the scene. In November 2010 they bought from RBS (a) the rights against Mr. Maud and Mr. Quinlan in respect of the balance of the Personal Loan and the accompanying securities, (b) the rights against Ramblas in respect of the Junior Loan together with the accompanying rights under the Ramblas and Delma Share Pledges and the Personal Guarantee, and (c) the rights against Ramblas under a further agreement known as the “Upside Fee Agreement” (the “UFA”).

Shortly thereafter, in December 2010, Aabar and Edgeworth accelerated the Junior Loan and in February 2011 they brought proceedings in England against Mr. Maud and Mr. Quinlan in respect of the Personal Loan and against Ramblas in respect of the Junior Loan. On 17 June 2011, orders were made by consent by Mr. Justice Teare giving judgments against Mr. Maud and Mr. Quinlan on the balance of the Personal Loan and interest in the sum of about €52.6 million. Subject to credit being given for the estimated value of security held (c. €10 million), it is this judgment debt that forms the basis for the bankruptcy petition against Mr. Maud. On the same day Aabar and Edgeworth also obtained judgment against Ramblas on the Junior Loan and interest in the sum of about €216.6 million.

Aabar and Edgeworth next sought to acquire Mr. Quinlan’s shares in Ramblas. This was achieved via the involvement of some of the parties to a separate dispute over the ownership and control of an unrelated company known as Coroin Limited (“Coroin”), which owned a group of hotels including The Savoy. The connecting factor was that one of the assets pledged by Mr. Quinlan to RBS to secure the Personal Loan was a substantial shareholding in Coroin. However, RBS’s charge over the Coroin shares ranked behind two others in favour of two Irish banks, each of which had sold their respective loans and linked security interests to different parties who appeared to be interested in acquiring control of Coroin, namely the Barclay brothers (acting through companies called B Overseas Limited and Ellerman Corporation Limited) and a Malaysian businessman called Mr. Jho Low (acting through a company known as JQ2 Limited).

Two related agreements were entered into on 23 September 2011: the first was between B Overseas Limited, JQ2 Limited and Aabar; and the second was between Aabar and Edgeworth and Mr. Quinlan. The deal encapsulated in these agreements had four essential parts: (i) JQ2 Limited sold the debt and security which it held over Mr. Quinlan’s Coroin shares to Ellerman for £49.1 million; (ii) Aabar and Edgeworth released their security over Mr. Quinlan’s Coroin shares in exchange for a payment of £9.4 million in cash from Ellerman; (iii) Ellerman released any and all claims which it might have in relation to Ramblas; and (iv) Mr. Quinlan was prevailed upon to enter into a conditional sale of his shares in Ramblas to Aabar and Edgeworth.

The fourth element – the sale of Mr. Quinlan’s shares in Ramblas - was achieved by a “Deed of Sale and Adherence” under which, subject to a condition precedent, Mr. Quinlan agreed to sell his nine shares in Ramblas (defined in the Deed as “the Shares”) to Aabar (which bought four shares) and to Edgeworth (which bought the remaining five), for a total consideration of €1. Clause 3 of that agreement was as follows,

“3.1

The agreement to sell and purchase the Shares … is conditional upon the transfer of the Shares to [Aabar and Edgeworth] becoming permissible pursuant to article 11 … of the [Articles of Association of Ramblas] (the “Condition Precedent”).

3.2

[Mr. Quinlan] shall use reasonable endeavours to ensure that the Condition Precedent is satisfied…

3.3

If a shareholder of [Ramblas] seeks to exercise [a pre-emption right contained in the Articles over the Shares, Mr. Quinlan] shall co-operate with [Aabar and Edgeworth] and (to the extent lawful to do so) take instructions from [Aabar and Edgeworth] in order to prevent such shareholder from acquiring the Shares.

3.4

… for the avoidance of doubt, irrespective of the satisfaction of the Condition Precedent, [Aabar and Edgeworth] shall at all times and, and in their sole and absolute discretion, remain at liberty to pursue the acquisition of the Shares by other means, including in connection with [the enforcement of the Ramblas Share Pledge].”

Of particular relevance to the current dispute involving Mr. Maud are the additional obligations undertaken by Mr. Quinlan pending completion of the transfer of his Shares. Under clause 5, Mr. Quinlan gave various undertakings as regards the exercise of his rights as a director and shareholder in Ramblas, and clause 5.1.3 was as follows,

“5.1.3

Pending completion of the transfer of the Shares in accordance with this Deed, [Mr. Quinlan] shall:

(i)

only exercise the voting (and any other) rights attached to the [Shares to be acquired by Aabar] in such manner as [Aabar] shall direct; and

(ii)

only exercise the voting (and any other) rights attached to the [Shares to be acquired by Edgeworth] in such manner as [Edgeworth] shall direct.”

Under clause 9 of the Deed of Sale and Adherence, Aabar and Edgeworth agreed that if Mr. Quinlan complied with his obligations under the agreement, they would not present a bankruptcy petition against him in connection with any of the debts owed in connection with the Marme Group.

The reference in the Deed to the transfer of Mr. Quinlan’s Shares to Aabar and Edgeworth becoming permissible pursuant to Article 11 of the Articles of Association of Ramblas was to an article that provides that except in a limited number of specified circumstances, any transfer of shares in Ramblas can only be executed after the shareholder has first offered the share or shares concerned to his co-shareholders in accordance with the mechanism set out therein. As part of that mechanism, Article 11.6 provides as follows,

“The price of the offered shares shall – unless all parties agree otherwise in joint consultation – be determined by one or more independent experts to be appointed by the offeror and the co-shareholders in joint consultation. If the offeror and the co-shareholders are unable to agree on this within fifteen days … the willing party shall request the local sub-district court at which the company has its corporate seat to appoint three independent experts to determine the price…”

The other Article which is of importance in this case is Article 12.1 that provides,

“In the event that …

b.

a shareholder loses the right to dispose of his property in any manner whatsoever ….

the shares of the shareholder concerned must be offered to the co-shareholders …”

The remainder of Article 12 contains further provisions giving effect to this compulsory sale clause, including in particular Article 12.6 that provides that the provisions of Article 11 apply mutatis mutandis, except that the offeror may not withdraw his offer and may only retain any shares with respect to which the offer is not taken up. It is common ground between the parties that this clause would be irreversibly triggered if a bankruptcy order was made in relation to Mr. Maud and was not stayed: it was primarily for this reason that I granted a prospective stay of Mr. Registrar Briggs’ order pending the outcome of this application and any appeal.

After the judgment against him in 2011, Mr. Maud attempted to negotiate with Aabar and Edgeworth to settle his liabilities to them. Mr. Maud was, however, also under pressure from other creditors. A bankruptcy petition was presented against him on 18 June 2013 by a company known as Incorporated Holdings Limited (“IHL”). The petition debt was for about £19.6 million and arose out of a guarantee given by Mr. Maud for sums borrowed from IHL to help finance the purchase of the Santander Asset in September 2008.

In addition, on 19 February 2014 the Libyan Investment Authority (“the LIA”) served Mr. Maud with a statutory demand in relation to the amounts owing in respect of a personal guarantee given by him in respect of a €12.5 million loan made by the LIA to one of Mr. Maud’s companies, Propinvest Limited. The statutory demand was for about £17.5 million.

On 5 June 2014 Aabar and Edgeworth also served a statutory demand upon Mr. Maud for the amount outstanding under Mr. Justice Teare’s judgment of 17 June 2011 in respect of the Personal Loan.

It was not only Mr. Maud who was in financial difficulties. On 17 February 2014, each of the companies in the Marme Group (whose directors in the case of Delma and Ramblas included Mr. Maud as joint managing director) petitioned the Spanish court for the commencement of voluntary insolvency proceedings (‘concurso voluntario’). The companies accepted that they were unable to pay their debts, including in particular the obligations under the Senior Loan and a number of interest rate swaps with a variety of financial institutions. The petitions were granted by the Spanish court on 4 March 2014 and a body of insolvency administrators were appointed (the “Administrators”).

It appears that the relevant Spanish insolvency legislation contained a one-year moratorium that prevented enforcement of security over the assets of the Marme Group, including the Ramblas and Delma Share Pledges held by Aabar and Edgeworth. The Spanish insolvency proceedings did not, however, prevent the continuation of the proceedings that had already been commenced against Ramblas in England under the UFA. Those proceedings were resisted, but on 30 January 2015 Mr. Justice Hamblen gave a judgment against Ramblas in favour of Edgeworth and Aabar in the sum of about €105 million: see [2015] EWHC 150 (Comm).

In February 2015, and after unsuccessful negotiations between the Administrators and creditors, the companies in the Marme Group filed for the commencement of the liquidation stage of the Spanish insolvency proceedings. Under article 148.1 of the Spanish Insolvency Law, this triggered a requirement for the Administrators to submit a plan to the court for approval for the realisation of the assets of each of the companies. Such a plan was duly filed on 30 April 2015 (“the Plan”).

The Plan recited that the Administrators had valued the Santander Asset as a financial asset rather than as real estate, and had arrived at a range of values between €2.675 billion and €3.123 billion. The Administrators also reported that they had received two offers for the assets of the Marme Group: the most favourable of these was from Aabar and Edgeworth and involved the settlement or discharge of all of the liabilities of Marme and Delma and the purchase of the assets of Ramblas for €360 million. The Administrators assessed that this bid would cost Aabar and Edgeworth very close to €2.6 billion.

In their proposed Plan, the Administrators recommended a coordinated sale of the assets of all of the companies on terms that would allow for the discharge of at least all of the liabilities of Marme and Delma. They indicated that they would continue to solicit competing bids from interested parties.

Mr. Maud co-operated with GAC and AGC in putting together a bid for the assets of the Marme Group to rival that of Aabar and Edgeworth.

In connection with that bid, GAC bought the debt which Mr. Maud owed to IHL and agreed to the bankruptcy petition against him by IHL being dismissed. As regards Mr. Quinlan, on 7 June 2015 a Dutch foundation owned by GAC called Stichting Administratiekantoor Olivo (“Stichting Olivo”) entered into an agreement with Mr. Quinlan (the “Olivo Agreement”). That agreement provided for the issue of so-called “Depositary Receipts” for Mr. Quinlan’s existing shares in Ramblas and for him to transfer to Stichting Olivo any other shares that he might subsequently acquire or be entitled to acquire in Ramblas.

The Olivo Agreement was, however, expressly agreed to be subject to the earlier Deed of Sale and Adherence under which Mr. Quinlan had agreed to sell his shares to Aabar and Edgeworth. In particular, it was expressly provided that the Olivo Agreement should be read and interpreted so that no breach of the Deed of Sale and Adherence might occur, and Olivo expressly acknowledged that Mr. Quinlan should only exercise the voting and other rights attached to his shares in Ramblas in such manner as Aabar and Edgeworth might direct.

On 6 July 2015, the consortium comprising Mr. Maud and his associated company, Cruz Holdings Limited, together with GAC acting through Stichting Olivo, submitted a written bid to the Administrators of the Marme Group to purchase the assets and liabilities of the group (“the Consortium Bid”).

The Consortium Bid represented that it was financed and supported by AGC and provided for the purchase of the assets of the Marme Group on terms that would enable repayment or settlement of all of the Marme Group’s external liabilities. In particular, it offered a cash payment to the Administrators sufficient to enable the full repayment of the Senior Loan and the Junior Loan owed to Aabar and Edgeworth, together with the cash collateralisation of the contingent liabilities to counterparties under swap claims against the Marme Group and the liability of Ramblas to Aabar and Edgeworth under the UFA. In addition to the payments for the Santander Asset, the Consortium Bid also offered to discharge the Personal Loan owed by Mr. Maud to Aabar and Edgeworth.

In purported reliance upon the Olivo Agreement, the Consortium Bid represented that Stichting Olivo and Mr. Maud “beneficially own 100% of the equity interest of Ramblas” and that, together with Cruz Holdings Limited, they also “beneficially own 100% of the Shareholder Loans” owed by Ramblas. The Consortium Bid document thereby suggested that it would enable the shareholders of Ramblas (and thus Mr. Maud’s creditors) to benefit from any monies released after settlement of the swap claims and in the event of a successful appeal of Mr. Justice Hamblen’s judgment in relation to the UFA. In addition, Mr. Maud’s other creditors would benefit from the discharge of his liability to the Petitioning Creditors under the Personal Loan.

On 8 June 2015, Mrs. Justice Rose gave two judgments in relation to separate applications by Mr. Maud to set aside the two statutory demands served upon him by the LIA and by Aabar and Edgeworth.

Mrs. Justice Rose set aside the LIA’s statutory demand: see [2015] EWHC 1625 (Ch). Apart from unsuccessfully seeking to appear at the first hearing of Aabar and Edgeworth’s petition, the LIA has played no subsequent part in the proceedings. Mrs. Justice Rose’s decision has, however, very recently been reversed by the Court of Appeal: see [2016] EWCA Civ 788. This is a matter to which I shall return.

Mrs. Justice Rose did not set aside Aabar and Edgeworth’s demand. Mr. Maud had applied for the demand to be set aside on two grounds. The first was under Insolvency Rule 6.5(4)(b) on the basis that the debt in relation to the Personal Loan had (or arguably had) been satisfied in full by Mr. Quinlan as a result of the agreements between Aabar and Edgeworth and Mr. Quinlan in September 2011 to which I have referred. Mrs. Justice Rose rejected that argument, pointing out that although the parties had agreed to the security over Mr. Quinlan’s shares in Coroin being released, there was no mention of Mr. Quinlan’s liability to Aabar and Edgeworth having been discharged or treated as having been satisfied. She also observed that the provisions of clause 9 of the Deed of Sale and Adherence under which Aabar and Edgeworth agreed not to present a bankruptcy petition against Mr. Quinlan made no sense and would not have served its purpose of encouraging Mr. Quinlan to comply with his obligations under the agreement if his underlying liability had been discharged.

Mr. Maud’s second ground of challenge was that the statutory demand ought to be set aside because Aabar and Edgeworth were pursuing an illegitimate collateral purpose by seeking to make him bankrupt, namely to trigger the pre-emption process set out in Article 12 of the Articles of Association of Ramblas, and thereby to gain total control of Ramblas. The argument was that if Mr. Maud was declared bankrupt, Article 12 would be triggered in relation to his shares, giving Aabar and Edgeworth the opportunity to acquire control of Ramblas. In considering this argument, Mrs. Justice Rose referred to a number of authorities on abuse of process in the context of bankruptcy and winding-up, including In Re Majory [1955] 1 Ch 600, Re Leigh Estates (UK) Ltd [1994] BCC 292 and the decision of the Privy Council in Ebbvale Ltd v Hosking [2013] UKPC 1. She concluded,

“29

In the light of these authorities I conclude that the pursuit of insolvency proceedings in respect of a debt which is otherwise undisputed will amount to an abuse in two situations. The first is where the petitioner does not really want to obtain the liquidation or bankruptcy of the company or individual at all, but issues or threatens to issue the proceedings to put pressure on the target to take some other action which the target is otherwise unwilling to take. The second is where the petitioner does want to achieve the relief sought but he is not acting in the interests of the class of creditors of which he is one or where the success of his petition will operate to the disadvantage of the body of creditors. It is also clear from those authorities, and as a matter of common sense, that the jurisdiction of the court to dismiss a petition based on an undisputed debt on the grounds of collateral purpose must be exercised sparingly. Bankruptcy proceedings cannot be allowed to become the forum for a detailed investigation into past and present relationships or an exploration of what the petitioner hopes to gain from the insolvency of the company or individual, in financial or personal terms and a consideration of whether those hopes are legitimate or not.

30

Applying the authorities to the present case, there is no abuse of process here. This is not a case where [Aabar and Edgeworth] do not really want to make Mr Maud bankrupt – on the contrary Mr Maud's case is that it is his bankruptcy that will trigger the pre-emption rights that will entitle either Mr Quinlan or [Aabar] (depending on whether the share transfer of Mr Quinlan's half has been completed) to get hold of his half of Ramblas' share capital. Secondly, it has not been suggested that the bankruptcy would damage the prospects of Mr Maud's other creditors. There is no reason to suppose Mr Maud's Ramblas shares will be sold under the pre-emption provisions of the Ramblas articles of association at less than their proper price. Those monies will then be available for the general body of Mr Maud's creditors.

31

Mr Maud has expressed the hope and expectation that if he is given a little more time to put his affairs in order, he will be able to realise some of his assets and generate enough money to pay off all his creditors. But this judgment debt has been unpaid for nearly four years now and I do not consider that the court is bound to enquire into the reasons why [Aabar and Edgeworth] have been prepared to wait that long or why they are prepared to wait no longer. That trespasses into considering [Aabar and Edgeworth]’s motive for the petition which, as the Privy Council held, is irrelevant to the court's jurisdiction.

32

I therefore hold that even if [Aabar and Edgeworth]’s motive in bringing this petition is to trigger, by Mr Maud's bankruptcy, Mr Quinlan's rights of pre-emption over Mr Maud's shares in Ramblas, that does not mean that the petition is an abuse of process or that there are other grounds within Insolvency Rules r 6.5(4)(d) why I should be satisfied that the statutory demand should be set aside.”

Mr. Maud sought permission to appeal that decision, but his application was refused by Mrs. Justice Rose. Permission to appeal was subsequently also refused by Lady Justice Gloster on 1 July 2015.

Aabar and Edgeworth presented their bankruptcy petition against Mr. Maud on 15 June 2015. The petition was heard for the first time on 7 July 2015 before Mr. Registrar Briggs. Aabar and Edgeworth applied for an immediate bankruptcy order. That was resisted by Mr. Maud and a number of opposing creditors, including in particular GAC (in its capacity as holder of the debt acquired from IHL) and a Luxembourg company called Navarro Ventures S.a.r.l. (“Navarro”) which was said to be beneficially owned by Mr. Maud’s estranged wife, and which had acquired debts of about £56 million which had originated from loans to Mr. Maud by Kaupthing Bank hf.

Mr. Registrar Briggs gave an ex tempore judgment on 7 July 2015, adjourning the petition until after 30 September 2015: see [2015] EWHC 2220 (Ch). The Registrar summarised his reasons for adjourning the petition as follows,

“(1)

Despite the debt being undisputed, on the evidence before the court, there is a reasonable prospect of the debt being paid. If I am wrong about that, or that is putting the matter too high, there is at least a prospect of a better outcome for the general body of creditors if the [Consortium] bid is accepted …

(2)

This is the first hearing of the petition … If there is a prospect that the debt will be paid within a reasonable time frame the debtor should be given a chance to do so. That is, objectively speaking, in the interests of all parties acting in the course of a collective process.

(3)

The opposing creditor’s voice is strong and, in my judgment, an independent voice for an adjournment…

(4)

There is no identified prejudice to the petitioning creditor, other than not being able to obtain the Santander Asset with haste, which it does not deny is its endgame….

(5)

…Weighing the proposals, even with the flaws in [the Consortium’s] proposals in mind … there is a chance of a better outcome, and no urgent need for a bankruptcy order today, which would put the kibosh on any further proposals or payments …”

The next hearing of the petition was delayed until December 2015. By that time there had been a number of developments. In Spain, the Spanish court had refused permission for an urgent sale of the assets of the Marme Group but had approved the liquidation Plan proposed by the Administrators. A number of interested parties had, however, filed writs seeking clarification of the Plan. These had not been determined by the Spanish court, and accordingly the implementation of the Plan had been delayed. In the meantime, the bid by Aabar and Edgeworth had lapsed, but another had been received from a third party, Azora Capital SL.

In England, judgment had been given against Mr. Maud and Mr. Quinlan in favour of Aabar and Edgeworth on their joint and several guarantee of the Personal Loan in the sum of €40 million. Aabar and Edgeworth had, however, failed in an attempt to strike out proceedings commenced by Mr. Maud against Aabar claiming that he had reached a settlement agreement under which Aabar had agreed to sell Mr. Maud its rights in the Santander Asset and against Edgeworth for €250 million. Mr. Maud had also been cross-examined on his assets by Aabar and Edgeworth pursuant to CPR Part 71.

At the hearing in December, the Petitioning Creditors again sought an immediate bankruptcy order and Mr Maud, again supported by GAC and Navarro, sought an adjournment. Mr. Registrar Briggs adjourned the petition for the second time: [2015] EWHC 3681 (Ch). The Registrar first considered the question of the purpose for which the petition had been brought and was being pursued. After conducting a review of a number of the authorities on the nature of the class remedies of bankruptcy and winding-up, and abuse of process, he referred to the judgment of Mrs. Justice Rose and continued,

“74.

Mrs. Justice Rose relied on, or did not doubt, the evidence of Mr. Maud to find that the petition was presented for the purpose of making Mr. Maud bankrupt. She accepted Mr. Maud’s evidence that the reason behind the bankruptcy proceeding is to obtain “Ramblas’s share capital”. She also found that there was no abuse because there would be no detriment to creditors, as there was no evidence that the shares would be obtained by Aabar from Mr. Quinlan at anything less than market value.

75.

In my judgment the inquiry as to purpose may continue at the hearing of a bankruptcy petition even where an abuse of process is not found to exist at the statutory demand stage. There may be more evidence before the Court at the hearing of the bankruptcy petition than at the hearing of the application to set aside a statutory demand due to intervening events. The continuing inquiry as to the object of the petition may, however, be made in order to determine not whether the petition should be dismissed, but whether an immediate order for bankruptcy should be made.

76.

In my judgment the distinction between collateral purpose and ulterior object although fine is real even if the inquiry is similar. The collateral purpose inquiry searches for an abuse of process: where the purpose for the bankruptcy proceedings is to gain a collateral advantage and is not for the purpose for which the proceedings are properly designed and exist. The inquiry as to ulterior object is a search for anything done or proposed to be done which, although the proceedings have been properly brought, is designed by the petitioner to secure an advantage over the class in addition to seeking an order for bankruptcy. If the Court is satisfied that an ulterior objective exists, the burden of proof switches to the petitioner to prove on the balance of probabilities that an immediate order is required in the interests of the class or it is otherwise necessary.”

Mr. Registrar Briggs’ reference to the switching of the burden of proof was undoubtedly prompted by a number of Irish cases to which he had been referred, including, in particular, a dictum of McCarthy J in Re Bula Limited [1990] 1 IR 440. Applying that approach, the Registrar then set out a number of factors which he considered relevant to the issue of whether Aabar and Edgeworth had an ulterior objective in pursuing the petition against Mr. Maud. These included the following,

“77.1

The admission that the Petitioners wish to acquire the Santander Asset;

…

77.3

Rose J accepted the evidence of Mr. Maud (supported by the 2011 Agreements), in the set aside application that an order for bankruptcy will trigger the pre-emption rights entitling Aabar to “get hold of his half of Ramblas’ share capital”;

77.4

Getting hold of the Ramblas share capital is significant in the bankruptcy of Mr. Maud as the shareholding represents his only known asset of value (demonstrated during the course of the CPR Part 71 proceedings);

77.5

The pre-emption rights enable Mr. Quinlan to be at the front of the queue in the race to obtain the shares from a trustee in bankruptcy and thus by reason of the 2011 Agreements, place Aabar in a favourable position;

77.6

As a result the Petitioning Creditors do not stand shoulder to shoulder with Mr. Maud’s general body of unsecured creditors;

…

77.10

The evidence supports the view (because the value of the Ramblas shares will be directly referable to the value of the Santander Asset) that if the Consortium bid is successful “the debts due to Aabar and Edgeworth will be settled in full and I shall be able to utilise the available equity to settle my other creditors’ claims.”

77.11

One would expect unsecured creditors to consider this a favourable outcome but the Petitioning Creditor insist they will proceed with the petition whether or not the Consortium proposal is successful;

77.12

This seemingly dogmatic approach fails to recognise the aim to pay the Petitioning Creditors in full;

77.13

Two major creditors (even if Navarro is connected: section 435 Insolvency Act 1986) support the view that all Mr. Maud’s creditors will be paid if the Consortium bid succeeds; and

77.14

If an immediate order for bankruptcy is made there is at least some danger (which is highly contested) that the Consortium will not proceed with the bid.”

Having considered a number of other points, the Registrar concluded,

“80.

It would often be virtually impossible, without cross-examination, for a Court to conclude that a creditor is using the bankruptcy process for purposes other than those connected to a class action. However there is no need for direct evidence. Its existence may be inferred from the circumstances of the case. In my judgment the factors I have set out above overwhelmingly lead me to infer that the Petitioning Creditors have an ulterior object in pursuing the petition. It may not be the only purpose and so improper, but the burden shifts to the Petitioning Creditors to show that an immediate order will benefit the class.

81.

The same evidential factors as set out in paragraph 77 above lead me to conclude that an immediate bankruptcy order will not, on the balance of probabilities benefit the general unsecured creditors at this point in time. Mr. Maud has explained he has no assets to enforce against; the Petitioning Creditors have examined him in court and have no evidence of available assets other than the Ramblas shares; and the realisation of the Ramblas shares at a proper price, under proper conditions could benefit all creditors. On the other hand an immediate bankruptcy order would not only give the Petitioning Creditors (Aabar, and Edgeworth more tangentially) an asset capable of repaying the petitioning debt, but an asset worth considerably more than the debt by reason of the 2011 Agreements. No other creditor would benefit.”

The Registrar then considered the views of the supporting and opposing creditors and the prospects for payment of the petition debt. He had earlier accepted submissions made on behalf of the Petitioning Creditors that the court hearing a bankruptcy petition could and should discount the views of creditors connected with the debtor in the same way as it does when hearing a winding-up petition. On this basis he discounted the views of GAC and Navarro to some extent given their connections with Mr. Maud, but nonetheless reached the view, in paragraph 87 of his judgment, that the “numbers, quality and quantity in value” of the opposing creditors “tilted the balance” in favour of an adjournment.

The Registrar then considered the submissions concerning the Consortium Bid and concluded as follows,

“92.

In my judgment and doing the best I can based on the untested (by way of cross-examination) evidence before the Court, a further adjournment of a reasonable time is more likely than not to result in a payment in full of the petition debt and benefit to the unsecured creditors of Mr. Maud as a class.

93.

The Liquidation Plan, supervised by the Spanish Court pursuant to the SIA, provides a time-tabled outcome. The outcome in terms of who succeeds in the bid process may be uncertain but there is a fully regulated process. The bid of the Consortium is funded and presents the highest bid to date…

94.

As the bidding process has certainty, is regulated by the SIA, approved by the Spanish Court and moderated by the Administration Liquidator, it is likely on the balance of probabilities to produce the best opportunity for the class; as the majority in value and number (even taking account of their connection) support an adjournment; and as the Consortium bid appears serious I find, even if I am wrong about the presence of an ulterior object, there should be an adjournment and an immediate bankruptcy should not be made. I test this against the submission made by [counsel for the Petitioning Creditors] that all his clients want is to be paid. If that really is the case they will see the sense of an adjournment at this point in time.”

The Registrar thus determined to adjourn the petition until April 2016, by which time it was anticipated that final bids for the Santander Asset would have been made.

The third hearing of the petition took place before Mr. Registrar Briggs in April 2016. In the intervening months since December 2015, nothing of any significance had occurred. In particular, the auction process for the Santander Asset was no further advanced. This was due, in large part, to the fact that the judge in charge of the insolvency in Spain had suffered a car accident which had resulted in an extended period of absence during which none of her colleagues had felt able to make any substantive decisions concerning the case.

The Registrar heard detailed argument from the parties over two days on 14-15 April 2016 and delivered a reserved judgment: [2016] EWHC 1016 (Ch).

In his judgment, the Registrar first accepted a request from the Petitioning Creditors to “revisit” paragraph 76 of his December Judgment in which he had distinguished between a “collateral purpose” and an “ulterior object”. As I have indicated, the Registrar had held that if a petitioner was pursuing the petition solely for a collateral purpose it would be an abuse of process which might lead to the petition being struck out or dismissed; whereas if a petitioner was pursuing a petition with the ulterior objective of securing an advantage over the class in addition to seeking an order for bankruptcy, this had the effect of reversing the burden of proof at the hearing of the petition so as to require the petitioner to show on the balance of probabilities that an immediate order was necessary in the interests of the class. Aabar and Edgeworth submitted that unless the petitioner’s only purpose in pursuing the petition was a collateral purpose, the petition would not be an abuse of process; and that if it was not an abuse of process, any ulterior objective or motive of the petitioner was irrelevant to the question of whether the petition should be adjourned or an immediate bankruptcy order made.

The Registrar introduced his renewed analysis in the following way,

“39.

It is true … that there are no English cases that have considered an adjournment based on an argument that (a) there is an ulterior object and (b) that it is not in the interest of the creditors as a class to make an immediate order. The Conjunction of (a) and (b) is critical (the “Conjunction”) to an understanding of the proposition. If the court were to find that there was an ulterior object and also find (on a challenge) that it was in the interests of the class as a whole to make an order, there could be no ground for an adjournment … I inferred there was a Conjunction at the last hearing.”

The Registrar then observed,

“43.

In the December Judgment the court was referred to Re Bula Limited [1990] 1 IR 440 (McCarthy J) and Re Goode Concrete (in receivership) [2012] IEHC 439 (Lafoy J). These authorities were used to demonstrate persuasive authority for the proposition that in certain circumstances the burden moves to a petitioner to show that an immediate order is for the benefit the class of creditors as a whole. [Counsel for Navarro] submitted that where there is an undisputed debt or judgment debt there is a presumption in favour of the petitioner that an order for bankruptcy will be made. The petitioner is entitled to an order ex debito justitiae. If high authority is required for this proposition Lord Wilson in Ebbvale approved the following general proposition articulated by Sargant J in Re Amalgamated Properties of Rhodesia (1913) Ltd [1917] 2 Ch 115 at page 121:

“the petitioners, as judgment creditors for this very large sum, are prima facie entitled ex debito justitiae to a winding up order, and it seems to me to be impossible to displace that prima facie position without the very strongest proof that the petition is being improperly made use of for some ulterior motive.”

44.

In my judgment this passage makes good the submission made by [counsel for Navarro] that there is a presumption (dressed here as a prima facie position, requiring the very strongest proof to dislodge). Where there is such a presumption or prima facie position the burden rests with the debtor to show some reason why an order should not be made or why an adjournment is appropriate. If a debtor is able to demonstrate the Conjunction as I have described, the presumption that an order will be made is negated and the burden of proof rests with the petitioner to show why an order is in the best interests of the class.”

The Registrar then considered submissions concerning the Irish cases and concluded that they provided persuasive authority for the proposition that the burden of proof could shift during bankruptcy proceedings, and that the court had a discretion to adjourn or stay proceedings if there was evidence of what he had termed “the Conjunction”.

Although he had effectively reaffirmed his earlier view of the law, the Registrar then went on to express the view that it was open to Aabar and Edgeworth “to return to court to demonstrate why the Conjunction is no longer present”. The Registrar then revisited the conclusion that he had “overwhelmingly” reached four months earlier in December that the Petitioning Creditors had an ulterior object in pursuing the petition. On this occasion, however, the Registrar reached the opposite conclusion, namely that there was insufficient evidence to support an ulterior object.

It is evident, however, that the Registrar did not reach that opposite conclusion on the basis of any new facts or matters that had arisen since the date of his earlier judgment. Instead the Registrar focused on the question of whether the Petitioning Creditors had the ulterior object of acquiring Mr. Maud’s Ramblas shares as a result of triggering the pre-emption rights in the Articles of Ramblas, and found, as a consequence of a re-interpretation of those Articles, the Deed of Sale and Adherence and the Olivo Agreement, that they did not.

The essence of the Registrar’s conclusion was that the Deed of Sale and Adherence dealt solely with Mr. Quinlan’s existing shares in Ramblas and no other shares; and that if Mr. Quinlan acquired Mr. Maud’s shares, he would be obliged to transfer them to Stichting Olivo. The Registrar dismissed the argument made by counsel for Mr. Maud that if Mr. Maud was made bankrupt, the Petitoning Creditors could direct Mr. Quinlan to exercise the right of pre-emption using clause 5.1.3 of the Deed of Sale and Adherence, and thereafter acquire both Mr. Maud’s shares and Mr. Quinlan’s shares. In paragraphs 69-70 of his judgment, the Registrar concluded,

“69.

In my judgment this analysis suffers from at least three difficulties. First, and most obviously, the right of pre-emption is attached to Mr. Quinlan's shares which are at present vested in him. Nothing in the 2011 Agreement entitles the Petitioners to Mr. Maud's shares. Secondly, there is no evidence that Mr. Quinlan will be able to afford to purchase Mr. Maud's shares under the Pre-Emption Provisions or that Mr. Quinlan is minded to purchase the shares. But if Mr Quinlan does purchase Mr. Maud's shareholding he will have to do so at market value; the market value will enure for the benefit of the creditors through an appointed trustee-in-bankruptcy. The value obtained will be for the benefit of all creditors. Lastly, Mr. Quinlan is obligated under the Olivo Agreement the result of which is that Olivo acquires Mr. Maud's shares not the Petitioners.”

70.

Accordingly, the allegation that the Petitioners have an ulterior object is difficult to sustain. I am not persuaded. The admission that the Petitioners want to acquire the Santander Asset in the absence of the alleged right of acquisition of Mr. Maud's shares is likely to amount to no more than a desire evidenced by the fact that they have submitted a bid to acquire the Santander Asset in the past. The factors relied in paragraph 77 of the December Judgment fall away once the main allegation of ulterior object has been neutralised.”

Finally - and briefly - Mr. Registrar Briggs rejected what he described as the “second arm” of Mr. Maud’s ulterior object argument – namely that the bankruptcy proceedings were intended to undermine the Consortium Bid. In this respect he held,

“74.

…The difficulty with the argument is that the Marme Group became the subject of concurso voluntario in March 2014 and entered liquidation in February 2015. The statutory demand is dated 5 June 2014 and was served soon after. The Petitioners could not have known about the Consortium bid at the time they served the statutory demand. The application to set aside the statutory demand was not heard until May 2015 after which the court gave permission to present the petition. The temporal difficulty exposes the weakness of this attack.”

Having thereby held that there was no basis for a finding that Aabar and Edgeworth had an ulterior object in pursuing the petition, the Registrar then followed the approach based upon the Irish cases and held that the burden shifted to Mr. Maud “to provide credible evidence as to why a bankruptcy order should not be made”. The Registrar reviewed the history of events and concluded,

“88.

In my judgment the ability of Mr. Maud to pay his creditors within a reasonable time is uncertain, dependent on too many events requiring a successful outcome, on circumstances that are beyond his control and reliant on a foreign process that has to date proved unpredictable in terms of timing. On two occasions long adjournments have resulted in no progress. Even if the bids were to progress with reasonable haste from this point, and even if there were no further impediments along the bid process path, it is far from certain, at this stage, that the creditors of Mr. Maud will be paid in full. The most recent bid submitted by the Consortium requires full funding and is based upon the participation of ‘the equity’. Although there is some evidence of funding I agree with the submission that is not recent or convincing. The bid would require Mr. Quinlan to acquiesce as a holder of half of ‘the equity’, but his shareholding is controlled by the Petitioners who may bid in competition to the Consortium. If the Consortium bid were to overcome these inconveniences and succeed in acquiring the Marme Group, negotiation or litigation would ensue in respect of the Swaps and UFA issues. This litigation would have to lead to a reduction in the Marme Group’s liabilities and a corresponding increase in value attributable to Mr. Maud’s shareholding. The value of the shares would need to be realised at some stage in order to repay his debts. No time-limit has been suggested for this last step.

89.

In my judgment these obstacles and uncertainties are inconsistent with a finding that there is a reasonable prospect that creditors will be paid within a reasonable time.”

By the time that the appeal came on for hearing before me on Monday 11 July 2016, the Court of Appeal had substantially upheld Hamblen J’s judgment in favour of Edgeworth and Aabar against Ramblas under the UFA: see [2016] EWCA Civ 412. There had also been two further, and more significant, developments.

The first of these followed shortly after the Registrar had handed down his judgment indicating an intention to make a bankruptcy order. On 13 May 2016 the Consortium Bid was replaced by a new bid by AGC (“the AGC Bid”). Although the AGC Bid stated that it had been “made known” to Mr. Maud, Cruz Holding Limited and Mr. Quinlan, who “did not oppose” it, there was no indication that Mr. Maud would have any interest in the purchasing vehicle, the AGC Bid did not promise the payment of sufficient monies to the Marme Group to result in a return to the shareholders of Ramblas, and there was no proposal to pay any part of the debts owed by Mr. Maud to the Petitioning Creditors, as had been the case with the Consortium Bid. The suggestion in Mr. Maud’s evidence is that the Registrar’s decision to make a bankruptcy order against him had contributed to AGC withdrawing support for the Consortium Bid or any other structure under which he might have an interest in a vehicle to acquire the Santander Asset.

The second development occurred on the eve of the hearing. At some point after the Registrar’s decision in April 2016 there had been a falling out between Aabar and Edgeworth. The immediate consequence for the appeal hearing before me was that Aabar instructed new solicitors and different counsel from Edgeworth, and on Friday 8 July 2016 counsel for Edgeworth filed a supplemental skeleton argument. That supplemental skeleton reiterated Edgeworth’s primary submissions, including the submission that the Registrar had been correct to conclude that the Petitioning Creditors did not have the ulterior object of either (a) gaining ownership of Mr. Maud’s shares in Ramblas through triggering the pre-emption rights in Ramblas’ articles, or (b) undermining the Consortium Bid. However, it then went on to state,

“In light of instructions received yesterday from Edgeworth, it is however accepted that (1) Edgeworth believed that Mr. Maud was using his position as director and shareholder in the Marme Group to frustrate Edgeworth’s attempts to recover full value for its investment in the Marme Group, to acquire the Santander Asset or otherwise protect its mezzanine position of €360 million, (2) it perceived that placing Mr. Maud’s assets under the control of an independent trustee would be likely to remove that obstacle, and (3) this formed part of its motivation for seeking to bankrupt Mr. Maud.”

The natural reading of that statement is that part of the reason that Edgeworth wished to make Mr. Maud bankrupt was to trigger the obligation upon him to sell his shares in Ramblas, thereby removing his ability to use his position as a shareholder in Ramblas to frustrate Edgeworth’s attempts to acquire the Santander Asset. In light of that admission, Edgeworth’s supplemental skeleton argument consequently accepted that the statements in its main skeleton to the effect that “the Registrar was correct to find that there was no ulterior object” in Edgeworth petitioning for Mr. Maud’s bankruptcy were “unsustainable”.

This revelation prompted an irate response from Mr. Maud and his lawyers. Mr. Maud produced a witness statement drawing attention to the fact that Edgeworth’s admission was contrary to submissions made on behalf of the Petitioning Creditors to the Registrar at the hearing in April that,

“Edgeworth and Aabar have not stated that they are seeking to make Mr. Maud bankrupt in order to acquire the asset. Their evidence is that their wish to acquire the Santander Asset and their wish to make Mr. Maud bankrupt are not connected.”

Mr. Maud also pointed out that counsel for the Petitioning Creditors had told the Registrar that,

“We don’t accept we had any collateral purpose, whether main or otherwise”.

Mr. Maud contended that the Petitioning Creditors, or at least Edgeworth, had allowed their counsel to mislead the Registrar. These allegations were repeated in oral submissions at the hearing by Mr. Clutterbuck QC, who appeared for Mr. Maud.

I suggested to Mr. Zacaroli QC, who appeared for Edgeworth, that it was undesirable for the corrective statement as to Edgeworth’s objectives or motives to appear only in his supplemental skeleton argument. In response, Mr. Tchenguiz produced a witness statement that simply repeated the relevant part of the skeleton argument verbatim. Mr. Tchenguiz did not otherwise respond to the points that had been made in Mr. Maud’s witness statement or by Mr. Clutterbuck in submissions, or provide any further information or insight as to why the instructions that had prompted the supplemental skeleton argument had only been given to Edgeworth’s counsel on 7 July 2016.

When Mr. Fisher came to make submissions on behalf of Aabar, he generally endorsed the submissions made on behalf of Edgeworth, but reserved his position in relation to the question of his own client’s objectives or motives. Mr. Fisher indicated that this was because he had been unable to get instructions, in part because of the religious festival of Eid in Abu Dhabi. I therefore indicated that if Aabar wished to address the point, it had permission to file evidence, subject to Mr. Maud having a right to comment thereon.

On 20 July 2016 Aabar produced a witness statement from a Mr. Mohamed Al Mehairi, the Chief Executive Officer of Aabar’s parent company, who stated that he now has “oversight” of the conduct of the proceedings on Aabar’s behalf. Mr. Al Mehairi indicated that there has been a change in senior management of Aabar since the service of the statutory demand in 2014, and that he could only speak to the belief and motivations of Aabar’s current management and his “understanding of its previous belief and motivations.” Mr. Al Mehairi did not, however, indicate from whom or where he gained that “understanding”, or why evidence had not been adduced from the relevant individuals.

Notwithstanding these deficiencies in his evidence, Mr. Al Mehairi echoed Mr. Tchenguiz and asserted that Aabar had not pursued the bankruptcy petition against Mr. Maud either to gain ownership of Mr. Maud’s shares in Ramblas through triggering the pre-emption rights in Ramblas’ Articles, or to undermine the Consortium bid. He then continued,

“6.

At the time that the petition was presented, the senior management of Aabar believed that its ability to preserve the value of the Junior Debt and the Personal Loan, and to realise value for its investment in those assets, was being frustrated by Mr. Maud who, in his capacity as a shareholder and former director of companies in the Marme Group, was believed to be influencing the pursuit and settlement of litigation involving those companies that was commenced pre-liquidation.

7.

The senior management of Aabar believed that, if an independent trustee in bankruptcy were to control Mr. Maud’s assets, that officeholder would be likely to exercise the rights attaching to those assets in a commercial and rational way, for the benefit of Mr. Maud’s creditors, which in turn would improve Aabar’s prospects of preserving or realising the value of its investment.”

After adding that these beliefs were part of Aabar’s motivation “in addition to seeking payment by way of a dividend in any eventual bankruptcy”, Mr. Al Mehairi concluded,

“However, to the extent that the senior management of Aabar has attempted to acquire the Santander Asset, it did not believe, nor was it one of its purposes in petitioning, that Mr. Maud’s bankruptcy would itself enable it to acquire the Santander Asset.”

On appeal, Mr. Clutterbuck, for Mr. Maud, contended that the Registrar was right in his analysis of the law and his approach based upon the Irish cases, so that any ulterior object of the Petitioning Creditors would place the burden of proof on the Petitioning Creditors to show that it was necessary to make an immediate bankruptcy order rather than adjourn the petition. However, he contended that Mr. Registrar Briggs was wrong (both in substance and as a matter of procedural fairness given that his December judgment had not been appealed) to have reversed his earlier view that Aabar and Edgeworth were indeed pursuing an ulterior object in seeking a bankruptcy order. Mr. Clutterbuck contended that the Registrar should have adhered to his earlier view in December that the Petitioning Creditors had the ulterior objective of using the bankruptcy petition to assist their efforts to obtain the Santander Asset by (i) triggering the pre-emption provisions in the Ramblas Articles so as to obtain Mr. Maud’s shares in Ramblas, and (ii) undermining the rival Consortium Bid and Mr. Maud’s participation in it.

Further, in light of Mr. Tchenguiz’s evidence, Mr. Clutterbuck contended that, contrary to what it had told the Registrar, Edgeworth had now accepted that it had an ulterior object of seeking a bankruptcy order – namely to stop Mr. Maud using his position as director and shareholder of companies in the Marme Group to frustrate Edgeworth’s attempts to acquire the Santander Asset. He submitted that notwithstanding Mr. Al Mehairi’s evidence, it was implausible that Aabar had not shared that aim.

In his written response to Mr. Al Mehairi’s evidence, Mr. Clutterbuck submitted that Mr. Al Mehairi’s reference to litigation involving the Marme Group could only be a reference to Aabar and Edgeworth’s claim against Ramblas under the UFA, and that the reference to preventing Mr. Maud from assisting Ramblas to resist such claim was itself an acknowledgement that Aabar had an ulterior object not shared by other creditors of Mr. Maud. He further submitted that because any increase in Ramblas’ indebtedness to Aabar and Edgeworth under the UFA would reduce the prospect of any surplus monies being available to the shareholders of Ramblas, this was an objective that was contrary to the interests of Mr. Maud’s creditors as a class.

Mr. Clutterbuck’s written submissions concluded by remarking on the lack of any apology in either Mr. Tchenguiz’s or Mr. Al Mehairi’s witness statements for Mr. Registrar Briggs having been misled in April into finding that the Petitioning Creditors did not have any ulterior object in pursuing their petition. He submitted that since Mr. Tchenguiz had been present at the hearing before the Registrar, “as regards Edgeworth it can be said that the Registrar’s April judgment was procured dishonestly”, and that the bankruptcy order should therefore be set aside and the petition dismissed.

Edgeworth’s principal case on the appeal, which was supported by Aabar, was that the Registrar had been correct to conclude that there was no reasonable prospect of payment of the petition debt within a reasonable period of time so as to warrant a further adjournment of the petition. The Petitioning Creditors also submitted that the decision whether or not to adjourn a petition based upon an undisputed debt was a discretionary one, and that the Registrar’s conclusion was well within the generous ambit within which reasonable disagreement was possible, and hence that it should not be reviewed on appeal. The Petitioning Creditors contended that this was sufficient reason to dismiss the appeal.

On the question of ulterior objects, the Petitioning Creditors contended that in light of Mrs. Justice Rose’s decision that the petition was not an abuse of process, Mr. Registrar Briggs had been wrong in law and in his adoption of the principle derived from the Irish cases, and that he should not have considered whether or not they had an ulterior object when deciding whether to make a bankruptcy order or adjourn the petition. On that basis, the Petitioning Creditors submitted that their recent evidence as to their objectives was irrelevant. Without prejudice to that contention, they said that the Registrar had been correct, for the reasons that he gave, to conclude that they did not have the ulterior object of either gaining ownership of Mr. Maud’s Ramblas shares through triggering the pre-emption rights in Ramblas’ articles, or of undermining the Consortium Bid.

From this brief description of the rival arguments, it is apparent that the main issues of law on the appeal are the extent (if at all) to which questions of ulterior objectives (or motives) are relevant to the decision whether to make a bankruptcy order; whether the Registrar was right to adopt the approach that he did based upon the Irish cases; and how such matters relate to the exercise of discretion to adjourn a petition if there are reasonable prospects of payment.

I therefore turn to consider the relevant legal principles.

Bankruptcy has frequently been referred to as a “class remedy”. In modern parlance, it is a “collective insolvency proceeding” or a process for collective enforcement of debts. The purpose of the collective proceeding is for the property of an individual who is unable to pay his debts to be realised under the control of an independent trustee, and, after payment of any debts or liabilities having priority, for the remaining monies to be distributed pari passu to the debtor’s unsecured creditors. The ordinary rights of action of individual creditors against the debtor are curtailed accordingly.

Although there are some differences in the process, the essential collective nature of bankruptcy is no different to its corporate equivalent of compulsory winding-up: see e.g. Cambridge Gas v. Official Committee of Unsecured Creditors of Navigator Holdings plc [2007] 1 AC 508 at paragraphs 14-15 per Lord Hoffmann. The nature of such a class remedy and its consequences as regards the approach of the court to the making of the order have been considered in many cases involving the winding-up of companies over the years. The classic statement of the law is that of Buckley J in Re Crigglestone Coal Company Limited [1906] 2 Ch 327 at 331-332,

“I will state shortly what I take to be the law. First, as between the creditor and the company, who are his debtors, the unpaid creditor who shews insolvency is entitled ex debito justitiae (as it is generally termed) to a winding-up order—that is to say, to an order by virtue of which the creditor, by the hands of a liquidator, is entitled to seize the assets of his debtor and administer them for the payment of himself and other creditors….

But then comes another consideration, viz., that the order which the petitioner seeks not an order for his benefit, but an order for the benefit of a class of which he is a member. The right ex debito justitiae is not his individual right, but his representative right. If a majority of the class are opposed to his view, and consider that they have a better chance of getting payment by abstaining from seizing the assets, then, upon general grounds and upon s. 91 of the Companies Act, 1862, the Court gives effect to such right as the majority of the class desire to exercise. This is no exception. It is a recognition of the right, but affirms that it is the right not of the individual, but of the class; that it is for the majority to seek or to decline the order as best serves the interest of their class. It is a matter upon which the majority of the unsecured creditors are entitled to prevail, but on which the debtor has no voice.”

The formulation of Buckley J was subsequently endorsed by the Court of Appeal in Re P & J Macrae Limited [1961] 1 WLR 229. At page 232 Willmer LJ referred to Crigglestone Coal and commented,

“It is to be remarked that in that case there was no question of opposition to the petition on the part of other unsecured creditors, the issue being between the petitioning creditor on the one hand and the company and the debenture holders on the other. What was said by Buckley J. as to the right of other unsecured creditors was, therefore, obiter, and this point was not dealt with by the Court of Appeal to which the case subsequently went. But the remarks of Buckley J., and particularly his insistence on the creditor's right being a class right, have been generally accepted as an authoritative statement, and, indeed, have not been challenged before us on behalf of the petitioning creditors in the present case.”

Although Buckley J’s dictum had simply referred to the court giving effect to the wishes of the majority of the class, the exercise to be carried out by the court in this respect is not a simple counting of heads or value of debts. This was explained in greater detail by Upjohn LJ in Re P&J Macrae at pages 238 and 239,

“Although the statute provides that it is the wishes of the creditors to which the court may have regard, it is quite clear that, as the statute gives a complete discretion, the weight to be given to those wishes in determining whether a winding-up order ought to be made varies according to the number and value of the creditors expressing wishes, and the nature and quality of their debts. I certainly do not accept for one moment the proposition that it is merely a matter of counting heads and that a majority of 51 per cent. opposing a petition will outweigh the views of the 49 per cent. who support the petition. In such a case where the wishes of the creditors are so evenly balanced (and there is no reason to distinguish between creditors as mentioned below) the weight to be given to the majority view is obviously negligible. No judge, in my judgment, could possibly be criticised if, in the absence of other relevant circumstances, he chooses to exercise his discretion by giving effect to the prima facie right of the petitioning creditor to a winding-up order. At the other end of the scale there is the case where an overwhelming proportion of the creditors in number and value oppose the petitioner who is virtually alone. In that case clearly the weight to be given to those creditors, unless there is some reason for disregarding them, must be very great, and in the ordinary case in the absence of special circumstances will be decisive.

All one can say as between those two limits is that the weight to be given to the wishes of the opposing creditors must necessarily depend on all the circumstances of the case, but other things being equal, will increase in the mind of the judge as the majority of opposing creditors increases.

…..

But it is not merely a matter of calculating percentages in value. Apart altogether from prospective or contingent creditors whose position may be difficult to assess, a judge may properly take the view that greater weight should be given to the wishes of a large number of small creditors against the wishes of one or two very large creditors, even though the latter are larger in amount in the aggregate.

Then there may be differences in the quality of the creditors. The circumstances may be such that the court is rightly suspicious of the opposing creditors and of the motives which are actuating them. In such a case the court may desire to have evidence before it of their reasons for opposing. It must be a question of discretion in each case whether creditors should be asked to file evidence to support the views they have expressed or not. I do not think it is possible to lay down any prima facie rule one way or the other. The judge may prefer to convene a meeting to ascertain their wishes.”

These principles were neatly summarised by Mr. Richard Sykes QC (sitting as a Deputy High Court Judge) in Re Leigh Estates (UK) Limited [1994] BCC 292. At page 294, Mr. Sykes QC said,

“The following matters are clear:

Although a petitioning creditor may, as between himself and the company, be entitled to a winding-up order ex debito justitiae, his remedy is a ‘class right’, so that, where creditors oppose the making of an order, the court must come to a conclusion in its discretion after considering the arguments of the creditors in support of and opposing the petition: see Re Crigglestone Coal Company Ltd [1906] 2 Ch 327, in particular the statements of principle of Buckley J at first instance, and s. 195 of the Insolvency Act 1986…

It is plain from the well-known authorities on the subject that, where there are some creditors supporting and others opposing a winding-up petition it is for the court to decide as a matter of judicial discretion, what weight to attribute to the voices on each side of the contest…”

None of the parties in the instant case suggested to me that the approach of the court in a bankruptcy case should be any different to the approach in corporate insolvency summarized in Leigh Estates, and the Registrar accepted that proposition in his judgment of December 2015. In my view he was obviously right to do so. That said, it is notable that there are no reported bankruptcy cases in which the application of such principles has been explored. The reason for this is probably that in contrast to the requirement for a winding-up petition to be advertised before hearing, there is no requirement that a bankruptcy petition be advertised, and hence the overwhelming majority of bankruptcy petitions are opposed only by the debtor, and other creditors do not appear. It is, however, perfectly plain that other creditors are entitled to appear and be heard on a bankruptcy petition, not least because the Insolvency Rules 1986 contain provisions for the giving of notice by creditors intending to appear and for the petitioning creditor to prepare a list of those who have given notice that they intend to appear, indicating whether they intend to support or to oppose the petition: see Insolvency Rules 6.23 and 6.24.

In addition to the principles governing the court’s general approach to the decision whether to grant the collective remedy of winding-up or bankruptcy to which I have referred above, the collective nature of the remedy has led the courts in a number of cases to restrain the presentation of a winding-up petition, or to strike out or dismiss a winding-up petition as an abuse of process, even though it is brought by a creditor whose debt is undisputed and unpaid.

In Re a Company (No. 001573 of 1983) [1983] BCLC 492, the debtor company carried on a mining business, and its only substantial asset was the lease of a mine in Scotland. It fell into financial difficulties and unsuccessfully negotiated with the petitioning creditor for an assignment of the lease. The petitioning creditor then approached the landlord directly and reached an agreement under which, if a winding-up petition was presented before a certain date so as to enable the landlord to forfeit (“irritate”) the lease, the landlord would grant a new lease directly to the petitioner. The evidence was that under Scots law the company would probably not be able to obtain relief against forfeiture, and so would lose its only asset.

The petitioning creditor obtained a costs order against the company and presented a petition as a prospective creditor. The company applied to restrain advertisement of the petition on two grounds, the second of which was that the petitioning creditor was abusing the winding-up proceedings to obtain a lease of the company’s premises. Harman J dismissed the petition. He stated,

“On a petition in the Companies Court in contrast with an ordinary action there is not a true lis between the petitioner and the company which they can deal with as they will. The true position is that a creditor petitioning the Companies Court is invoking a class right (see Crigglestone Coal Co. [1906] 2 Ch. 327), and his petition must be governed by whether he is truly invoking that right on behalf of himself and all others of his class rateably, or whether he has some private purpose in view…

The question for me, therefore, is whether I am satisfied that the petitioner seeks this winding-up for the benefit of his class. I am not concerned with his motives or with the past conduct of the company, which was here deplorable or worse and which may have led the petitioner to have justifiable dislike for and a desire to see the downfall of some person such as the main protagonist in the company. In my judgement the Bryanston Finance case merely shows that in this field the rule which applies at common law, that malice or bad motive does not make unlawful that which is otherwise lawful (compare Bradford Corporation v. Pickles [1895] 1 Ch. 145) also applies. The decision in Bryanston Finance never sought to overrule the basic law that the only proper purpose for which a petition can be presented is for the proper administration of the company's assets for the benefit of all in the relevant class. To hold otherwise would be to confuse motive, which is past, with purpose, which is future.

The question, therefore, is not “does the petitioner genuinely wish to wind up this company”, as Mr. Littman submitted. It would be hard for me to find that this petitioner, which has taken all regular steps to prosecute its petition and which plainly has reasons to desire the winding-up of this company, since that must put beyond much cavil the future of the company's lease, does not in truth desire to wind up the company. In my judgement the true question is “for what purpose does the petitioner wish to wind up this company”. A judge has to decide whether the petition is for the benefit of the class of which the petitioner forms a part or is for some purpose of his own. If the latter, then it is not properly brought.

If the petitioner can show that he and his class stand together and will benefit or suffer rateably, then his ill motive is nothing to the point. But here it is plain that no such even-handedness exists. If the petition is properly brought, then the petitioner stands to get a valuable asset for itself and the rest of the class of creditors are likely to get nothing. If the petition is not properly brought, so that in Scotland the company's lease remains un “irritated” (and I have no certainty that this will be so) then the class of creditors including the petitioner may all have some hope of payment or will at least suffer rateably.”

The situation in Re a Company was an obvious one in which the petitioning creditor’s purpose was to deprive the class of creditors that he purported to represent of any benefit from the company’s existing lease, and in effect to take that lease for himself. In such a case the petitioner’s objective is manifestly wholly adverse to the class interest, and it is evident that the collective proceedings are not being used for the purpose for which they are intended: see Re Majory [1955] 1 Ch 600 at 623-624.

Harman J’s judgment was cited at length and with apparent approval by the Privy Council in Ebbvale Limited v Hosking [2013] UKPC 1, albeit that Lord Wilson, giving the judgment of the Board, commented,

“In drawing the distinction between motive and purpose Harman J appears to have taken “motive” to embrace the reasons which have led a petitioner to embrace his “purpose”. On that basis he was right to observe that “motive” was irrelevant – the English Court of Appeal had also said so in Bryanston Finance Ltd v De Vries (No 2) [1976] Ch 63, at p 75E — although it may have been a little glib for him to say that, whereas “purpose” was future, “motive” was past.”

What Buckley LJ had said in Bryanston Finance Ltd v De Vries (No 2), in the passage referred to by Harman J and by Lord Wilson, was as follows,

“The judge, rightly in my opinion, thought that a petition could not be an abuse simply because the petitioner was actuated by malice. If a petitioner has a sufficient ground for petitioning, the fact that his motive for presenting a petition, or one of his motives, may be antagonism to some person or persons cannot, it seems to me, render that ground less sufficient. If, on the other hand, he has no sufficient ground, his petition will be an abuse, whether he be actuated by malice or not.”

The position may be more complicated where the petitioner has more than one purpose in bringing insolvency proceedings. In Ebbvale v Hosking, the petitioner, Mr. Hosking, was the trustee in bankruptcy of an individual who was thought beneficially to own a service station in England. He brought proceedings in England seeking a declaration that the service station was owned by the bankrupt, and joined as a defendant a Bahamian company, Ebbvale, which appeared to be making a rival claim to the property. Shortly before the English action was due to be heard, Mr. Hosking acquired a claim against Ebbvale from a third party and presented a winding-up petition against it in the Bahamas. Ebbvale unsuccessfully sought to have the petition dismissed as an abuse of process, and the Bahamian court made a winding-up order. The company appealed to the Privy Council.

The Privy Council concluded that although Mr. Hosking might well have thought it to be to his advantage as claimant in the English proceedings if a liquidator replaced the directors of Ebbvale, one of his other purposes was, as an undisputed creditor of the company, to have a “professional decision” taken on behalf of Ebbvale as to whether the company should incur further indebtedness in defending the English proceedings. Lord Wilson indicated that this second, legitimate, purpose did not need to be the principal purpose of the petitioner, citing the decision of Mr. Michael Briggs QC (as he then was) in Millenium Advanced Technology Limited [2004] 1 WLR 2177 at para 42. On this basis the Privy Council held that the petition was not an abuse of process and dismissed the appeal.

As I have indicated, the cases to which I have just referred were all relied upon by Mrs. Justice Rose in the set-aside judgment in the instant case. The passage in her judgment which is set out in paragraph 35 above, together with a dictum of HHJ Weeks QC in Hicks v Gulliver [2002] BPIR 518 at 523 commenting upon an observation of Nourse LJ in Re Malcolm Robert Ross (No.2) [2000] BPIR 636 at 643-644 were relied upon by Aabar and Edgeworth as justifying their propositions of law (i) that a petitioner’s motives are wholly irrelevant, and (ii) that where a petitioner’s objectives include the lawful one of seeking to obtain a dividend in the bankruptcy, the presence of any additional ulterior object is irrelevant, both to the question of whether the petition is an abuse of process and also as to whether a bankruptcy order should be made.

In Hicks v Gulliver, HHJ Weeks QC heard an appeal against a bankruptcy order made against Mrs. Hicks on the petition of two barristers who had unsatisfied costs orders against her. Those costs orders had arisen out of unsuccessful proceedings that Mrs. Hicks had brought against the barristers who had represented her in family law proceedings. Mrs. Hicks had also sued a third barrister involved in the proceedings (a Mr. Gosland), and an offer had been made by the first two barristers not to pursue bankruptcy proceedings if Mrs. Hicks dropped her claim against the third barrister. That offer was rejected and a bankruptcy order was made. On appeal, HHJ Weeks QC stated,

“The sole argument presented to me on behalf of Mrs Hicks on this appeal is that under [s.266(3) of the Insolvency Act 1986], the application should have been dismissed as an abuse of the court's process because the intention of the petitioners was to stifle the proceedings against Mr. Gosland and that that is not a legitimate purpose.

The ambit of this subsection has, so far as I know, since the Insolvency Act been considered only in one case, to which I was referred, namely Re Malcolm Robert Ross (a Bankrupt) (No 2) [2000] BPIR 636, a decision of a two-man Court of Appeal given by Nourse LJ with whom Mantell LJ agreed. In that case the Court of Appeal refused to dismiss the petition as an abuse of the process of the court but did dismiss it on the basis that the effect would be to stifle another action. The latter is not an argument which is presented to me; only the abuse argument is before me, and as to that Nourse LJ said:

‘Although, before Jacob J, Mr Corbett did not shrink from saying that one of the considerations which had led to the presentation of Stonewood's petition was that Mr Ross would not be able to pursue the claim against Miss Jeffs himself, and although Miss Jeffs did not take the opportunity to respond to Mr Ross's affidavit of 30 June 1998, we cannot in my view proceed on the footing that it was presented solely for the purpose of stifling the action. What has to be considered is the purpose of Stonewood, which had obtained a regular judgment against Mr Ross in respect of his unlawful lettings of parts of its property and his unlawful collection of rents therefrom. An assumption of everything in Mr Ross's favour in regard to his claim against Mrs Jeffs could not have justified what he did, which was independently actionable at the suit of Stonewood. It must therefore be assumed that part at least of Stonewood's purpose in presenting the petition was the lawful purpose of seeking to obtaining a dividend in the bankruptcy.'

That is authority which is binding on me for the proposition that if the presenter of a petition has two purposes, one of which is the lawful purpose of seeking to obtain a dividend in the bankruptcy, a second purpose, however important that might seem to the presenter, is insufficient to justify stigmatising the petition as an abuse of the court's process.

Mr Bamford has submitted to me that this part of the decision of the Court of Appeal may have been per incuriam and that it should be sufficient for the predominant purpose of the petitioner to be illegitimate for the petition to be struck down.

In my judgment, however, it is sensible not to make any difficult value judgments between separate purposes – I try not to use the word ‘motive' which may be construed as looking to the past rather than the future – of the petitioner which may be very difficult to evaluate, and I think I am bound to hold that if at least one genuine purpose of the petitioner is to obtain a dividend in the bankruptcy if one is forthcoming, that is sufficient to justify the presentation of a petition.”

Pulling these threads together, on the basis of these authorities I consider that it is clear that “motive” in the sense used by Buckley LJ in Bryanston Finance Ltd v De Vries (No 2), by Harman J in Re a Company and by Lord Wilson in Ebbvale v. Hosking – namely subjective reasons such as malice or personal animosity - that cause a petitioner to embrace a purpose, aim or objective in presenting and pursuing a petition, do not make a petition that is not otherwise an abuse of process into an abuse of process.

It also appears that a petitioner who has more than one objective or purpose in presenting and pursuing a petition may be able to avoid a finding of abuse of process if one of his purposes is legitimate, even though that is not his principal purpose. However, as regards the decision in Hicks v Gulliver, I would observe in passing that I do not think that it can be the law that just because a petitioner can say that one of its purposes is to obtain a dividend (however small) on its debt in the bankruptcy, its petition cannot be an abuse of process, no matter what its other purposes might be. As I observed in argument, and none of the counsel who appeared before me disagreed, the effect of a petitioner who is seeking a winding-up or bankruptcy order with the illegitimate purpose of obtaining a benefit for himself at the expense of the other creditors may well be merely to reduce, rather than eliminate altogether, the dividend payable on the unsecured debts in the bankruptcy. Such a case may be no less an abuse of the collective process because the petitioner can say that he would (in addition to obtaining the singular benefit for himself at the expense of the other members of the class) also wish to receive the (reduced) dividend on his debt.

But beyond those points, I do not think that any of these authorities establish the wider propositions for which Aabar and Edgeworth contend. The authorities are all concerned with the question of whether a company or individual debtor who did not dispute the petition debt could nonetheless establish that the petition was an abuse of process. The cases did not decide, and did not purport to decide, that the motives and objectives of a petitioning creditor are necessarily irrelevant for all purposes connected with the ultimate determination of the petition.

In particular, in my view Mrs. Justice Rose’s warning in the final sentence of paragraph 29 of her set-aside judgment must be read in the context of the decision that she was making at the preliminary stage of challenge to a statutory demand, and in light of the authorities to which she had referred. As Mrs. Justice Rose expressly acknowledged in the preceding sentence of her judgment, these authorities were addressing the question of dismissal of a petition on the grounds of collateral purpose. Mrs. Justice Rose was not addressing the different question that subsequently faced the Registrar on the hearing of the petition.

In that regard, it is significant that none of the authorities relied upon by Aabar and Edgeworth were cases where the petition was being opposed by other creditors. In such a case, for the reasons that I have already given, and as explained in cases such as Crigglestone Coal, P&J Macrae and Leigh Estates, the collective nature of bankruptcy proceedings requires the court to evaluate the wishes of the creditors and to attribute weight to the views of individual creditors in deciding whether to grant the relief sought in the interests of the class. As Upjohn LJ made clear in P&J Macrae, this will require consideration of all the circumstances. Accordingly, in the same way as he pointed out that the court might have suspicions about the motives of creditors who oppose a winding-up order (e.g. because of their connections to the company) and might require them to explain their reasons for doing so, in an appropriate case the court may also question the motives of the petitioners and supporting creditors and investigate whether they have any ulterior purpose(s) in seeking a winding-up order or bankruptcy order. Or as Mr. Richard Sykes QC put it in Leigh Estates,

“it is for the court to decide as a matter of judicial discretion, what weight to attribute to the voices on each side of the contest…”

(my emphasis)

As such, I cannot accept the Petitioning Creditors’ submission that once it is determined that a bankruptcy petition is not an abuse of process, the motives or objectives of the petitioning creditor in seeking a bankruptcy order are necessarily irrelevant. They may, depending on the particular circumstances, be relevant if the petition is opposed by other creditors and the court is required to conduct an evaluation of the class interest.

At this juncture, I should refer to a further point concerning the adjournment of a winding-up or bankruptcy petition that also featured in the judgments of the Registrar and in the arguments of the parties. A practice exists under which the judge may exercise his discretion to adjourn the petition rather than make an immediate bankruptcy or winding-up order on the basis that there are reasonable prospects of payment of the petition debt within a reasonable period. All practitioners who have cut their teeth on petitions day in the Companies Court or have appeared on bankruptcy petitions before the Registrars will be familiar with this practice, and with the pleas made with varying degrees of effectiveness, ingenuity or desperation on behalf of debtors seeking time to pay undisputed debts.

The practice was described by Lewison LJ in Sekhon v Edginton [2015] 1 WLR 4435 at [15]-[19],

“15.

[Insolvency] Rule 7.51A … provides that, with some exceptions, the CPR apply to insolvency proceedings with any necessary modifications, except so far as inconsistent with the Insolvency Rules. It seems to me, therefore, that in the case of a bankruptcy petition the jurisdiction to adjourn is now found in CPR r 3.1(2)(b).

16.

There are, however, differences between insolvency proceedings and an ordinary civil action. First, insolvency proceedings are class actions designed to secure distribution of an insolvent's assets pari passu between all his creditors. They are not merely a debt collection process. The primary purpose of the proceedings is to enable an independent person to ascertain and preserve the debtor's assets and to achieve that pari passu distribution.

17.

Second, the presentation of a petition has the effect that any disposition of property made without the consent of the court by a person who is subsequently adjudicated bankrupt is void: see Insolvency Act 1986, section 284. Accordingly, delay in dealing with a petition is liable to have adverse consequences for creditors generally: see In re A Debtor (No 72 of 1982); Ex p Mumford Leasing Ltd v The Debtor [1984] 1 WLR 1143 applied in Judd v Williams [1998] BPIR 88.

18.

Against this background, the practice has evolved in relation to the grant of adjournments of bankruptcy petitions where the debtor asks for time to pay. The starting point is that, if the petitioning creditor establishes that the statutory conditions are fulfilled, he is prima facie entitled to a bankruptcy order: see In re A Debtor (No 452 of 1948); Ex p The Debtor v Le Mee-Power [1949] 1 All ER 652 and the In re A Debtor (No 72 of 1982) case, both referred to in Judd v Williams.

19.

The court, of course, has the power to adjourn the petition, but the practice is to do so only if there is credible evidence that there is a reasonable prospect that the petition debt will be paid within a reasonable time. There are many statements to this effect in the cases of which the following recent ones are representative:

“A debtor clearly has no right to an adjournment in these circumstances, although it may be that a court would grant one if he could produce convincing evidence that the debt would be paid within a very short period”: Anderson v KAS Bank NV [2004] BPIR 685, para 23 per David Richards J.

“A petitioning creditor has a prima facie right to obtain a bankruptcy order on, as this was, a duly presented petition where the liability of the debtor for the petition debt is, as it is here, clearly established. Equally, the court hearing the petition has a discretion to adjourn the petition for payment if, but only if, there is a reasonable prospect of the petition debt being paid in full within a reasonable time. See In re Gilmartin (A Bankrupt) [1989] 1 WLR 513, 516 and much subsequent authority to a similar effect. There must be credible evidence to support such a prospect if the court is to grant an adjournment for payment”: Harrison v Seggar [2005] BPIR 583, para 7, per Blackburne J.

“There is no doubt that the court retains a discretion not to make a bankruptcy order, even where the petition debt has been clearly established and any grounds of opposition have been dismissed. However, the authorities establish that in such circumstances the discretion to adjourn should only be exercised if there is a reasonable prospect of the petition debt being paid in full within a reasonable period … Furthermore … ‘There must be credible evidence to support such a prospect if the court is to grant an adjournment for payment’”: Ross v Revenue and Customs Comrs [2010] 2 All ER 126, para 72, per Henderson J.

If the debtor does not produce any evidence of his ability to pay, he takes the risk that the court will not accept his bare assertion as to his means and ability to pay: see Dickins v Inland Revenue Comrs [2004] BPIR 718.

20.

A decision whether or not to grant an adjournment is, of course, a discretionary case management decision and, consequently, the judge's exercise of his discretion in this case cannot be impugned on appeal except on the usual grounds for impeaching a judicial exercise of discretion.”

As the authorities cited by Lewison LJ make clear, this practice can be viewed either as the exercise of a general discretion of the court to refuse to make a bankruptcy order and/or as an exercise of the discretionary case management powers of the judge to adjourn the petition. For reasons that I have already explained, it is almost always exercised at the behest of the debtor in situations where the petition is not otherwise opposed. Moreover, as the authorities to which Lewison LJ referred demonstrate, it places the onus upon the debtor to produce evidence of his means and ability to pay, and requires the judge to form his own view of whether that evidence justifies giving the debtor a (limited) period of time to pay.

It is therefore readily apparent that this type of discretionary decision is not a substitute for the consideration by the court of the separate question of the views of the members of the class in a case in which the petition is opposed by other creditors. In such a situation, as Buckley J indicated in Crigglestone Coal, the majority of creditors may consider that their prospects of getting paid are better if no bankruptcy order is made at all. That decision is theirs to make, and is not circumscribed by considerations as to whether payment will be made “within a reasonable time” – whatever that might be taken to mean in the particular circumstances of the case. It is also a question in which “the debtor has no voice”.

The final principle of law to which I should briefly refer, as it featured in a number of cases to which reference was made in argument, is that there are cases that illustrate that the court may, in exceptional cases, exercise its general discretion to decline to make a bankruptcy order or a winding-up order if it is satisfied that the order will serve no useful purpose because there will be no assets available in the insolvent estate for creditors. That was the main point of decision in Crigglestone Coal and also appears to have been the basis for the dismissal of the bankruptcy petition in Re Malcolm Robert Ross (a Bankrupt) (No 2) [2000] BPIR 636, where the Court of Appeal seems to have formed the view that the only asset in the debtor’s estate was a cause of action against the controller of the debtor’s only creditor that would not be pursued by a trustee in bankruptcy but which might be pursued by the debtor if no order was made. It is clear, however, that a debtor faces a heavy burden in persuading the court not to make an order on that basis: see e.g. re Field (a debtor) [1978] Ch 371 at 375, and Shepherd v Legal Services Commission [2003] BCC 728.

Although the Registrar referred to a number of the principles that I have set out above in his judgments, his second decision in December 2015 and the decision under appeal in April 2016 both adopted an approach which appears to have been urged upon him by counsel for Navarro by reference to a number of Irish decisions. This approach focused upon whether the court could be satisfied that the petitioner had an ulterior object, in which case the burden of proof would shift to the petitioner to demonstrate that an immediate order was required in the interests of the class or was otherwise necessary (see e.g. paragraph 76 of the December 2015 judgment, repeated at paragraph 36 of the April 2016 judgment); whilst if the court was not satisfied that the petitioner had an ulterior object, the petitioner would be entitled to a bankruptcy order ex debito justiciae, and the burden would be upon the debtor to show why an immediate bankruptcy order should not be made (see e.g. paragraphs 43 and 44 of the April 2016 judgment).

The three Irish decisions upon which the Registrar relied were Re Bula Limited [1990] IR 440, Re Genport Limited [1996] IEHC 34 and Re Goode Concrete Limited [2012] IEHC 439.

In the Bula case the petition to wind up a plainly insolvent company was presented by secured creditors who held security over all of the assets of the company and had earlier appointed a receiver. They did not do so in order to obtain repayment of their secured debts, but purely in order to prevent a judgment creditor (Munster) that had registered its judgment against the company from obtaining, by the passage of time, equivalent security to their own security. The petition was granted at first instance and a winding-up order made, but an appeal by Munster was allowed.

The statement upon which reliance was placed by the Registrar was a passage in McCarthy J’s judgment at page 448. I have highlighted the passage from the judgment in the extract below. It is, however, worth reading the passage in context. The judge had first referred to the evidence filed by the petitioning creditors and continued,

“…nowhere can I find in these affidavits any purported justification for bringing the petition other than the indebtedness itself and the defeat of the Munster registration. If that be the case, in my judgment the presentation of the petition was an abuse of the process of the Court.

Section 213 of the Companies Act 1963 provides that a company may be wound up by the court if the company is unable to pay its debts and s.309 provides that the court may have regard to the wishes of the creditors or contributories of the company, in the case of creditors regard being had to the value of each creditor’s debt. Both sections are expressed in a permissive form but “may” sometimes means “shall”. The section, in my opinion, gives to the court a true discretion which should be exercised in a principled manner that is fair and just.

I would hold that a creditor is prima facie entitled to his order so as to shift the initial burden to those who oppose the winding up; the petitioner does not have to demonstrate positively that an order for winding up is for the benefit of the class of creditors to which he belongs, but, if issue is joined on the matter, and a case made that the petition is not for that purpose but for an ulterior, though not in itself improper object, then the burden shifts back to the petitioner. Here, the ulterior motive or purpose is not in issue, and, until the hearing in this Court, no other object appeared to be in mind.”

McCarthy J then examined the evidence. He held that what he described as “the petitioners’ prima facie right to an order” had been displaced by their own evidence, and rejected an argument by the petitioning creditors that their intention to defeat the Munster registration was justifiable as “a manoeuvre testing the Munster bona fides”. McCarthy J then returned to the essential basis for his decision at the end of his judgment. At pages 450-451, after identifying the various creditors in favour or against the winding up, and simply listing a considerable number of authorities, including Re P&J Macrae and Harman J’s decision in Re a Company, McCarthy J concluded,

“It is no disrespect to the weight of these authorities that I do not cite any in particular. Shorn of these expressions of legal opinion, many dependent upon a variety of single instances and special facts, in my judgment, in this case of special facts, where a petition is brought by secured creditors whose security attaches to the entire assets of the debtor company and who have appointed a receiver whose power of sale is, effectively, at least as great that of a liquidator, at least as great as that of a liquidator, the Court should refuse its aid.”

I do not, with respect, find the decision in Re Bula Limited persuasive. The statement of McCarthy J relied upon by the Registrar was not derived from any analysis of authorities, and it does not in fact seem to have been necessary as a basis for the decision. The real basis for McCarthy J’s decision was that the presentation of the petition was an abuse of process. This is entirely understandable: the petitioning creditors were secured, and had presented their petition not to obtain the class remedy of a winding up order for the benefit of the unsecured creditors, but in order to prevent an unsecured creditor’s registered judgment from being elevated to the status of a secured debt and sharing in their security. Mr. Zacaroli submitted, and I agree, that on any conventional view - and certainly as a matter of English law - that was an abuse of the winding-up process.

In Re Genport, the petitioner based her petition upon an unpaid costs judgment. Her petition was opposed by the company and four of its trade creditors. They contended that the petition was really brought in order to prevent further litigation by the company against the petitioner’s employer, who had financed the case in which the costs order had been made in her favour. They also contended that the petition had been presented to enable that employer to forfeit the lease of the company’s premises of which it was the landlord.

Although the judge, McCracken J, cited McCarthy J’s dictum in Re Bula, his judgment does not indicate how he applied it. Instead, his decision was taken on the basis of an evaluation of all of the circumstances and an assessment of the views and interests of all of the creditors. These included the ulterior purposes of the petitioner (which the judge described as “not necessarily an improper motive”), and the views of the four opposing trade creditors, who took the view that the company should be permitted to continue to trade at a profit (which the judge described as “highly significant”). The judge concluded,

“Accordingly, while neither might in itself be decisive, in my view the combination of the ulterior, although not necessarily improper, motive and the fact that a winding-up may not be of any real benefit to ordinary creditors are sufficient to persuade me to exercise my discretion in refusing to make the winding-up order.”

It therefore seems to me that Re Genport does not in fact support the “shifting burden of proof” approach, but if anything is consistent with the conventional English approach of assessing where the class interest of the unsecured creditors lay having regard to the “quality” of the various creditors. It is also an illustration of how the court can and should have regard to an ulterior purpose which it did not think amounted to an abuse of process.

The final Irish case is Re Goode Concrete Limited. In that case the petitioner was alleged to have presented the petition to frustrate competition proceedings against it. The judge (Lafoy J) referred to the earlier cases and concluded,

“26.

Having regard to the legal principles identified in those authorities, I have come to the conclusion that the following factors are relevant to the Court’s determination on the petition in this case:

(a)

It is clear on the evidence that the Company has no unsecured assets whatsoever which a liquidator, if appointed, could utilise to meet the claim of the Petitioner and the claims of the other unsecured creditors. That factor on its own, of course, does not entitle the Court to refuse to make a winding up order because it is expressly provided in subs. (1) of s. 216 that “the court shall not refuse to make a winding up order on the ground only that the assets of the company have been mortgaged to an amount equal to or in excess of those assets, or that the company has no assets”.

(b)

However, that factor does allow the Court to draw the inference that the Petitioner has some motive other than securing discharge of the Company’s indebtedness to it for bringing the petition. If the Company is wound up, the liquidator will have no unsecured assets available out of which he could fund the prosecution of the Competition Proceedings and, as a matter of probability, the liquidator will not prosecute the Competition Proceedings. That being the case, and the Petitioner being one of the defendants in those proceedings, the only reasonable inference to draw is that the petition has been brought by the Petitioner with the ulterior motive of permanently stymying the Competition Proceedings.

(c)

The only creditors of the Company which would benefit from a winding up order being made are the Petitioner and the Co-defendants, who, as a matter of probability, will avoid having to defend the Company’s claims against them in the Competition Proceedings. The Co-defendants are the only creditors who have come forward to support the petition. On the other hand, AIB, which is the Company’s largest creditor and has security over all of the Company’s assets, and the majority in value of the unsecured creditors who have made their views known to the Court have clearly formed the view that it is to the detriment of the creditors other than the Petitioner and the Co-defendants that a winding up order be made. By virtue of s. 309 of the Act of 1963 the Court must have regard to the wishes of those creditors.

27.

Those factors lead to the conclusion that a winding up order should not be made at this juncture.”

Lafoy J then considered whether to dismiss the petition or simply adjourn it, and after considering a number of other arguments, decided to do the latter.

Again, it seems to me that this analysis does not indicate that Lafoy J applied a “shifting burden” analysis. Instead, it suggests that in deciding whether or not to make a winding-up order, the judge considered the “ulterior motive” of the petitioner as a factor which reduced the weight to be given to the views of the petitioner and its co-defendants, and weighed them against the views and interests of the other secured and unsecured creditors who opposed the petition.

Accordingly, I do not think that the Irish cases upon which the Registrar relied provide any support for a departure from the conventional approach of the English courts which I have explained. Moreover, in my view the facts of this case illustrate how the ‘shifting burden’ analysis adopted by the Registrar carries a real risk that the court will conflate, or simply not address, a number of distinct questions. Those questions are first, whether a petitioner with an undisputed debt is abusing the process of the court in seeking a bankruptcy order or a winding-up order for a purpose which is contrary or alien to the nature of the class remedy that he is purporting to invoke (e.g. Re a Company); secondly whether, if a petition which is not an abuse of process is opposed by other creditors, the court should grant or refuse a bankruptcy order or winding-up order in the interests of the class having evaluated the weight to be attached to the views of all of the various creditors in the class (e.g. P & J Macrae and Leigh Estates); and thirdly whether the court might, in the exercise of its case management powers, in any event adjourn the petition if it is persuaded that there is a reasonable prospect of payment of the petition debt in a reasonable time (e.g. Sekhon v Edginton).

In light of that review of the law, I therefore turn to consider the Registrar’s decision of April 2016.

As I have indicated, the Registrar reached his decision to make a bankruptcy order on the footing that the Petitioning Creditors had no ulterior objectives in pursuing the petition against Mr. Maud. That is clearly not the case. On the basis of their own evidence to which I have referred, Aabar and Edgeworth have each now accepted (to some extent) that they had some other objective(s) in pursuing the petition against Mr. Maud, albeit that these are not the ones alleged by Mr. Maud and the opposing creditors. In particular, Edgeworth has accepted that, in part, it sought a bankruptcy order in order to trigger the sale of Mr. Maud’s Ramblas shares and thereby to stop him using his status as a Ramblas shareholder to frustrate Edgeworth’s attempts to acquire the Santander Asset.

On the basis of the Registrar’s own approach, such an acceptance by at least one of the Petitioning Creditors that it did have some other purposes and objectives in seeking a bankruptcy order, would in all probability have led the Registrar to maintain that the burden was upon the Petitioning Creditors to show that an immediate order was necessary in the interests of the class. This was a burden that the Petitioning Creditors had not discharged in December 2015, and apart from the passing of four months, nothing else had changed in that respect.

As it is, however, for the reasons that I have explained, I take the view that the Registrar did not take the correct approach to the petition as a matter of law. For the reasons that I have given, in my view the Registrar should have evaluated the views of the members of the class of creditors and their reasons for seeking or opposing an order, taking into account, for example, the various objectives of the Petitioning Creditors and the nature and interests of the opposing creditors. But as a result of a combination of adopting the ‘shifting burden’ analysis based upon the Irish cases, and his finding that Mr. Maud had not established that the Petitioning Creditors had any ulterior objectives in petitioning, the Registrar did not give any consideration to that question in April.

In that regard, it is significant that in paragraph 87 of his December 2015 judgment, the Registrar had commented that,

“in terms of numbers, quality and quantity in value of creditors, the opposing creditors’ views tilt the balance in favour … of an adjournment”.

The Registrar had also said something similar in his judgment of July 2015. But although the Registrar referred in the introductory paragraphs of his April 2016 judgment to certain parts of the evidence filed by the opposing creditors, he did not indicate whether, and if so, why, his assessment of the balance of the views of the class of creditors might have changed. To that extent, therefore, I can have no assurance that if the Registrar had not been diverted by the Irish cases and the way the case was presented to him, he would necessarily have concluded that the class interest required him to make a bankruptcy order.

Moreover, for the reasons that I have explained, and contrary to Edgeworth’s arguments, it is not an appropriate substitute for consideration of the views of the members of the class of creditors, that the Registrar was of the opinion in April that Mr. Maud had not discharged the burden of showing that there was a reasonable prospect that his creditors will be paid within at reasonable time. That view would have been relevant to a case management decision whether to exercise the court’s discretion to give Mr. Maud more time to pay the petition debt under the practice discussed in Sekhon v Edginton, but it did not address the different question as to whether - to borrow the words of Buckley J in Re Crigglestone Coal – Mr. Maud’s creditors as a class might legitimately take the view that they had a better chance of getting something by abstaining from making Mr. Maud bankrupt than if he was made bankrupt immediately.

The difference in the question asked may be of real potential significance in the instant case. It is perfectly clear that the debts owed and assets owned by Mr. Maud are not debts of the conventional size and type usually seen in individual insolvencies for which a debtor may seek a reasonable time to pay, for example by trading profitably or liquidating other assets that he may own. Instead, although the Petitioning Creditors referred, in passing, to their concerns that Mr. Maud may have undiscovered assets or sources of income, which they sought to explore when examining Mr. Maud under CPR Part 71, it is, I think, reasonably apparent from the submissions that were made to me, that both sides take the view that the only realistic prospect of a substantial return to Mr. Maud’s creditors is if he can obtain some benefit from the Spanish bid process – either in his capacity as holder of the Shareholder Loan, or via the equity of redemption in his Ramblas shares, or via his individual participation in the acquisition vehicle of the Santander Asset.

In that regard, although both sides sought to analyse the Consortium Bid with a view to showing that Mr. Maud’s involvement with it carried the prospect of such a return, or did not clearly carry any such prospect, and it is true that the current ACG Bid does not appear to involve Mr. Maud, it seems to me that these submissions may well miss the point. The Spanish insolvency process leading to a sale of the Santander Asset is currently the only significant show in town, and although the timing of the process is uncertain, there is plainly the potential for increased bids to be made in that process. Mr. Maud’s creditors – acting in their capacity as such – are entitled to express a view on whether Mr. Maud has any realistic prospect of obtaining a benefit from whatever those bids might be, and whether his prospects of doing so will be affected in any way if he is made bankrupt.

In summary, therefore, it seems to me that as a consequence of the way in which the argument as regards the Petitioning Creditors’ objectives proceeded, coupled with the Registrar being diverted by the submissions based upon the Irish cases, the Registrar was led into omitting the critical stage in the exercise of his discretion of addressing the interests of the class and weighing the views of the creditors who supported and opposed the making of the bankruptcy order. Instead, he simply proceeded to the question of whether Mr. Maud had demonstrated that he had a reasonable prospect of paying the Petitioning Creditors within a reasonable time. That error in approach to the exercise of his discretion means that the Registrar’s decision to make a bankruptcy order was flawed and cannot stand. I will therefore grant permission to appeal and allow the appeal against the bankruptcy order that has been made.

The question therefore arises as to whether I should exercise my own discretion and decide whether to make a bankruptcy order or otherwise how to deal with the petition.

In that regard, the submission made in writing on behalf of Mr. Maud after the filing of Mr. Al Mehairi’s evidence was as follows,

“… the court should for the reasons addressed at the appeal hearing conclude that a bankruptcy order now would not be in the interests of Mr. Maud’s creditors and that Aabar and Edgeworth have no entitlement to further time to see whether that position may change in the future. In light further of their now admitted ulterior purposes, and of their conduct in seeking in the past to conceal the true position, the court should place little weight on them as creditors expressing a desire for a bankruptcy order, preferring the views of significant other creditors (Navarro and GAC) who do not desire a bankruptcy order. The court should set aside the order and dismiss the petition.”

Since the hearing, the question of the purposes or motives of the Petitioning Creditors has been further addressed in a communication that I received from Mr. Maud’s solicitors whilst writing this judgment in mid-August. That communication drew my attention to the fact that not only had Aabar and Edgeworth gone their separate ways in terms of legal representation, but that on 24 June 2016 Edgeworth had sought and obtained injunctive relief in the Commercial Court against Aabar Investments PJS (“Aabar PJS”) (which is Aabar’s parent company) and had issued proceedings against Aabar PJS on 28 June 2016 (“the Commercial Court Claim”). An expedited trial of the Commercial Court Claim has apparently been listed to be heard as soon as possible from March 2017, with a three-week time estimate. The existence of those proceedings was not disclosed to me at the hearing in July.

In the Commercial Court Claim, Edgeworth claims that Aabar PJS has breached certain agreements between them relating to their joint participation in what is variously described in Edgeworth’s pleadings as a joint venture between them “to acquire the equity in” the Santander Asset or “to acquire ownership of the [Santander Asset], whether by agreement with Mr. Maud and Mr. Quinlan or by a sale resulting from an insolvency process or otherwise”. In that regard, references are made to a number of parties who allegedly acted for Aabar PJS in relation to the joint venture to acquire the Santander Asset between 2010 and 2015: they do not include Mr. Al Mehairi. In addition, the agreements that are alleged to have been breached are said to include a number of terms relating to the potential acquisition by Aabar PJS and Edgeworth of the Ramblas shares and any subsequent dealings with them.

Edgeworth’s pleading also alleges that “notwithstanding the delay to date” the opportunity to acquire the Santander Asset “remains achievable within a reasonable timeframe (namely by the end of December 2016)”, but that in breach of the joint venture, Aabar PJS has taken steps to frustrate the achievement of the joint venture purpose “by unilaterally seeking to negotiate an agreement with Mr. Maud to the exclusion of Edgeworth and delaying the Maud Bankruptcy Proceedings”. The pleading goes on to set out various proposed dealings in June 2016 involving, among others, AGC, in relation to the potential sale of Aabar’s and/or Edgeworth’s interests in the Junior Loan, the Personal Loan and the associated security rights.

Mr. Maud’s solicitors contended that their recent discovery of the Commercial Court Claim and the events set out in the pleadings in it, give further support to Mr. Maud’s contentions that the Registrar was misled in April 2016, and that the limited admission in the witness statement of Mr. Tchenguiz is “less than the full story”.

In a response from Aabar’s solicitors, it is indicated that Aabar denies the claim by Edgeworth and suggests that its position cannot be equated with that of Edgeworth. Edgeworth’s solicitors also responded, taking issue with Mr. Maud’s solicitors’ characterisation of the pleadings. They suggested that, properly construed, the pleadings did not refer to any attempt to acquire Mr. Maud’s Ramblas shares through his bankruptcy, and provided no support for the claims that Edgeworth was trying to mislead the court. Both Aabar’s and Edgeworth’s solicitors’ letters concluded that Mr. Maud’s references to such matters simply underlined the submission that had been made on the appeal that it was inappropriate for the court hearing the bankruptcy petition to engage in a review of the Petitioning Creditors’ motives, purposes and beliefs.

Against this background I do not propose to exercise my own discretion in relation to the petition in this judgment. There are a number of reasons for this.

The first is that in spite of the assistance that I received from counsel at the hearing of the appeal, I do not think that I have heard relevant submissions properly focused on the correct issues that I have identified in this judgment – in particular upon the class question. In that regard, I have certainly not heard submissions from all of the creditors, and the evidential position is incomplete and unsatisfactory.

As regards the parties, I only heard submissions on the appeal from counsel for the Petitioning Creditors and for Mr. Maud. I did not hear submissions from any of the creditors who opposed the making of the order before the Registrar, namely GAC and Navarro. Although both sent letters indicating their support for Mr. Maud’s appeal, neither appeared at the hearing.

I am also conscious that since the hearing before me, the Court of Appeal has allowed the appeal of the LIA against Mrs. Justice Rose’s decision that it was not entitled to present a petition. As I have indicated, the LIA initially sought to appear before the Registrar at the first hearing in July 2015, but then played no further role in the hearings before the Registrar in light of Mrs. Justice Rose’s decision.

Although Edgeworth’s solicitors have, in correspondence since the Court of Appeal’s judgment, asserted that the LIA’s position has not changed since it indicated its intention to support the petition in 2015, the emails that I have seen from Hogan Lovells LLP, who claim to act for LIA, do not confirm that position. Instead, when asked, Hogan Lovells simply indicated that they were taking instructions.

There is, moreover, a question as to who is currently entitled to give instructions on behalf of the LIA in relation to this matter. Paragraphs 26-30 of the Court of Appeal’s judgment on the appeal against Mrs. Justice Rose’s decision ([2016] EWCA Civ 788) referred to a further decision of Mr. Justice Blair in Bouhadi v Breish [2016] EWHC 602 (Comm) that adjourned an application to determine who should now be recognised in England as the chairperson of the LIA. Although the Court of Appeal was able to avoid that issue on the basis that no doubt had been cast upon whether the statutory demand against Mr. Maud had been served with authority in February 2014, the answer to the question of who is currently entitled to give instructions or express a view on behalf of the LIA as to what should be done with the petition against Mr. Maud is unclear to me. The LIA is not an insignificant creditor of Mr. Maud, and at the very least it seems to me that there should be an opportunity for this matter to be explored before a decision is made on the petition.

So far as the evidential position as regards the opposing creditors is concerned, although the Registrar plainly did give their views some weight in his earlier judgments, I had no submissions and very little evidence to explain the current attitude and/or connections of Navarro and GAC with Mr. Maud. In particular, although GAC supported Mr. Maud’s appeal, its letter did not indicate what, if any, continued involvement or interest it might have in a revival of the Consortium Bid or in the Santander Asset in the event that the appeal was to succeed. I do not know whether, for example, GAC is now effectively in the position of an unattached creditor, no longer interested in the Santander Asset, or whether it might still be interested in an association with Mr. Maud in some way.

On the other side, quite apart from the matters alleged in the Commercial Court Claim, which I was not informed of at the appeal hearing, for the reasons that I have alluded to in paragraphs 64 and 66 above, I think that the evidence thus far provided by Aabar and Edgeworth before me falls manifestly short of providing a direct or comprehensive explanation of their current positions and of their reasons for pursuing the petition against Mr. Maud.

In that regard, I should add that in light of the fact that there may well yet be further relevant evidence to be adduced by the parties, I do not propose in this judgment to express any view on the correctness or relevance of the decision of the Registrar on the two issues that caused him to reverse his view as to the objectives of the Petitioning Creditors – namely his view that, as a matter of interpretation, triggering the pre-emption rights in the articles of Ramblas would not enable the Petitioning Creditors to use their rights under the 2011 Agreements to acquire Mr. Maud’s Ramblas shares; and that because of the timing of events, the purpose of the Petitioning Creditors cannot have been to frustrate the Consortium Bid.

All these matters are, however, for the reasons that I have given, at least potentially relevant to the exercise of assessing the weight to be given to the interests of the creditors on the petition. In saying that I am, of course, acutely conscious of the dangers of the court being drawn into extensive satellite litigation over the objectives, purposes, beliefs and/or motives of the Petitioning Creditors, any supporting creditors and the opposing creditors. But it seems to me that in what is undoubtedly an extremely unusual and complex case, I must nonetheless consider how such matters can be addressed in an efficient and focused manner, also taking into account the issues raised for determination in the forthcoming trial of the Commercial Court Claim.

Whilst I do not regard the Petitioning Creditors’ evidence to date as satisfactory, what I am certainly not prepared to do at this stage and without having given those parties a further opportunity to produce direct evidence to explain themselves, is to characterise the Petitioning Creditors’ conduct of the proceedings as dishonest or otherwise improper as alleged on behalf of Mr. Maud. At this stage, I do not think that it would be an appropriate or proportionate response to deprive any other creditors who might wish to support the petition, of the opportunity to argue for a bankruptcy order.

The second main reason why I do not propose to decide what to do with the petition in this judgment is that I am conscious that since the Registrar’s decision, the Consortium Bid has been replaced by the AGC Bid, this decision could itself have an impact upon the interested parties, and the Spanish process may have moved on. Any decision on the petition, whether on the question of the class remedy or in the exercise of my own discretion under the practice discussed in Sekhon v Edginton, should be made on the basis of an appreciation of the up-to-date facts. That point is reinforced by Edgeworth’s pleaded assertion in the Commercial Court Claim that the opportunity to acquire the Santander Asset “remains achievable within a reasonable timeframe (namely by the end of December 2016)”.

Accordingly, I shall, on the handing down of this judgment in approved form, hear argument as to all consequential matters, including setting a timetable for evidence, and a venue and window for the next hearing of the petition.