The judgment is available at: [2010] EWHC 836 (Ch) 

The limited liability partnership in question (the LLP) was established in Guernsey. It had legal personality pursuant to an election under the Limited Partnership (Guernsey) Law 1995. The general partner was KCP II (GP) Ltd (KCP). The LLP was a special-purpose vehicle used in connection with an investment fund known as KCP II (the fund). There were four limited partners, comprising four feeder fund entities, themselves vehicles for investment by different classes of investor. The fund was created in order for employees and others involved in the Kaupthing group of companies to invest alongside the ultimate parent of the group, an Icelandic bank (the bank), which was the single largest investor in the fund. Unconnected third parties were also able to invest in the fund through the feeder fund known as 'the main fund'. Investors' money went to the LLP and equity investments were made in the LLP's name in various United Kingdom registered companies, both private and public. The LLP was managed by its operator, SFAM Ltd, which initially delegated certain administrative functions to two companies which were part of the Kaupthing Group, one of which was KSF Ltd (KSF) an English registered investment bank. On 7 October 2008, the bank entered into insolvency proceedings in Iceland. On the following day, KSF was placed into administration by the British government. The LLP was unable to comply with a demand made against it on 8 October by its largest creditor, BL, and it was consequently insolvent. BL itself entered into insolvency proceedings in Luxembourg on 9 October. On 9 October, the respondent administrators were appointed, or purportedly appointed, by KCP. On the same day, they were also appointed as joint administrators of KCP. The administration of KCP and KSF potentially triggered termination of the fund. The joint administrators decided to restructure the LLP's management. A new subsidiary of KCP was incorporated to act as the LLP's new general partner, and a new operator and a new investment manager were appointed. There were difficulties with funding from BL. The first applicant was created as a result of restructuring BL and it took over LLP's debt to BL, which represented 99.4 percent of the LLP's aggregated unsecured indebtedness. The other two applicants were owed 0.4 percent. The applicants' total share of the LLP's indebtedness was therefore 99.8 percent. The parties made various applications to court relating to the administration.

The primary issues for determination were: (i) whether the administrators' appointment was effective, which depended on whether the LLP's centre of main interests (COMI) was Guernsey for the purposes of the Council Regulation (EC) 1346/2000 (on insolvency proceedings), (the EC Regulation), so that the English court had no jurisdiction in relation to the insolvency; and (ii) whether the appointment out of court and the written resolution leading to the appointment were formally and substantively invalid on the basis that instead of using Form 1B which applied to a partnership, as required by para 29(5) of Sch B1 to the Insolvency Act 1986 (the 1986 Act), (as modified by the Insolvent Partnerships Order 1994, SI 1994/2421), Form 2.10B (the company form) had been used.

The court ruled:

(1) The English Court might assert jurisdiction to open insolvency proceedings in respect of an entity outside England and Wales where the EC Regulation applied and the entity's COMI was within England and Wales. There was a presumption that a body's COMI was in the state where its registered office was located. The presumption could be rebutted only by factors which were both objective and ascertainable by third parties. Thus the court was to have regard to factors already in the public domain, or which would be apparent to a typical third party doing business with the body, excluding such matters as might only be ascertained on inquiry. Accordingly, the place where the body's head office functions were carried out was only relevant if so ascertainable by third parties (see [10], [13] of the judgment).

Since the LLP's registered office was located in Guernsey, there was a presumption that its COMI was also in Guernsey. Accordingly, it had to be determined whether the presumption was rebutted by factors which were objective and ascertainable by third parties. In deciding what would have been ascertainable by such third parties, the nature of the LLP's business and the identity of those third parties would have to be considered. In the instant case, the nature of the LLP's business was to hold a fund of investments and the operating agreement required those investments to be held in the LLP's name where practicable. It did not seem that the LLP itself conducted any active business as all its affairs had been conducted on its behalf by and through the operator, and by and through Kaupthing entities to which the operator had delegated certain functions. All such business had been conducted out of offices in London. Accordingly, while the investors would know, and indeed would consider it desirable for fiscal reasons, that the LLP had been registered in Guernsey with a declared principal place of business there, they would also know that the business matters had been undertaken on its behalf in London. Further, it would have been apparent to persons dealing with the LLP as creditors that their debtors' affairs were being conducted in London on the LLP's behalf (see [19], [21], and [26] of the judgment) .

The presumption as to COMI based on the location of the LLP's registered office had been rebutted so that the English Court had jurisdiction under the EC Regulation (see [27] of the judgment).

Eurofood IFSC Ltd, Re: C-341/04 [2006] All ER (D) 20 (May) applied; Re Stanford International Bank Ltd  [2010] EWCA Civ 137 applied.

(2) The position with regard to the forms of appointment of administrators to be used by different types of partnership established in England was that a general partnership was required to use Form 1B. A limited partnership under the Limited Partnerships Act 1907 had to do the same. However, a limited liability partnership established in Great Britain pursuant to the Limited Liability Partnerships Act 2000 was treated as a company for all the purposes of Sch B1 to the 1986 act, so that Form 2.10B was to be used, pursuant to para 5 of the Limited Liability Partnerships Regulations 2001, SI 2001/1090, made pursuant to s 14 of the 2000 Act (see [32] of the judgment).

On the evidence before the court relating to Guernsey law, the LLP, although a body corporate, was not a company under Guernsey law. Accordingly, the LLP was not a company for the purposes of Sch B1 to the 1986 Act. Consequently, pursuant to para 29(5) of Sch B1 to the 1986 Act, Form 1B should have been used rather than Form 2.10B. In the circumstances, waiver or correction did not arise. The court had no jurisdiction to correct any errors, since relief could only be granted once insolvency proceedings had begun. If the appointment was invalid, there were no insolvency proceedings (see [37] of the judgment).

The appointment of the administrators was invalid.