Ruling recognises foreign representatives’ right to pursue potential claims in Australia

The ruling was the outcome of the Federal Court of Australia’s consideration of an application by the Bankruptcy Office of Geneva which sought recognition of a foreign insolvency proceeding under the Model Law on Cross-border Insolvency of the United Nations Commission on International Trade Law, as it was incorporated into the Cross-Border Insolvency Act 2008 (Cth)(CBIA).

The Bankruptcy Office of Geneva had been appointed as trustee and representative of the insolvent estate of Swiss-based hotel reservation platform company Amoma SARL following the liquidation of the company by order of the Canton of Geneva in Switzerland on 28 October 2019 (Geneva proceeding). The trustee applied in the Federal Court of Australia for recognition of the proceedings and as a foreign representative under the Model Law in accordance with the CBIA.

The application was brought by the trustee to pursue a potential claim in Australia against hotel room re-selling business Trivago, including examining witnesses, taking evidence, and obtaining delivery of information in respect of Amoma. This followed the outcome of a separate proceeding brought by the Australian Competition and Consumer Commission, which found that Trivago had engaged in misleading conduct under Australian consumer law by making false and misleading representations on its platform. As a result of the prior proceeding, Trivago was ordered to pay penalties. 

Unlike other applications seeking recognition of foreign proceedings and foreign representatives, the Amoma decision was the first proceeding which considered the pursuit of a potential claim as opposed to the pursuit of immediately accessible assets in Australia.

Relevant principles of the Model Law

Insolvency practitioners seeking recognition of foreign proceedings under the Model Law in Australia must satisfy several requirements.

These include that the foreign proceeding must fit the definition of a collective judicial or administrative proceeding, including interim proceeding, in a foreign state according to insolvency laws where the assets and affairs of the debtor are subject to supervision by a foreign court for the purposes of reorganisation or liquidation.

In addition, the foreign representative must be a person or body authorised in the foreign proceeding to administer the reorganisation or liquidation of the debtor’s assets or affairs.

Further, the application must be accompanied by either a certified copy of the foreign proceeding and the order appointing the foreign representative, or a certificate from the foreign court affirming the existence of the order.

Depending on whether the debtor is an individual or not, the application must be filed in either the Federal Court of Australia, for debtors who are individuals, or the Supreme Court of a state or territory, for debtors who are not individuals.

Also, the foreign proceeding should take place in a state where the debtor has its ‘centre of main interests’. This can be rebutted, however, if it can be established that the debtor’s centre of main interests is situated somewhere other than the place of its registered office.

Upon recognition of a foreign proceeding, the court has the authority, under Model Law, to grant relief to a foreign representative to do certain things in the best interest of creditors, or to protect the assets of debtors, such as conducting public examinations and commencing legal proceedings.

Finally, when deciding whether to grant or deny relief under the Model Law the court must ensure that the interests of creditors and other interested persons are adequately protected.

The Federal Court’s ruling

The Federal Court was satisfied that the Geneva proceeding was a foreign proceeding and a collective proceeding. The Federal Court was also satisfied that the trustee was appropriately authorised according to the Bankruptcy Court of Geneva and the Swiss Federal Act of Debt Enforcement and Bankruptcy 1989.

The Court concluded that Amoma’s ‘centre of main interests’ was in Switzerland and recognised the Geneva proceeding in Australia as a foreign main proceeding for the purposes of the Act and the trustee as a foreign representative of the Geneva proceeding. In addition, the Court made orders that had the practical effect of Amoma being the subject of a winding up order according to Part 5 of the Corporations Act 2001 (Cth) as far as they related to the proposed proceeding against Trivago. 

This decision is significant as it provides a precedent from which foreign representatives can be recognised in Australia for the purposes of pursuing potential claims in Australia beyond the pursuit of immediately accessible assets in the insolvency of foreign entities and access to Part 5 of the Corporations Act 2001 (Cth) for the purposes of the pursuit of those claims.

Ultimately, the decision allows foreign insolvency representatives to explore the pursuit of claims in Australia, and the recovery of proceeds of such claims, for the benefit of creditors of the insolvent external administration.