Winding up order made despite the existence of earlier proceedings in Germany (Barings (UK) Limited and ors v Galapagos SA)

23 Aug 2022

Dispute Resolution analysis: The High Court has granted an application to wind up a company incorporated in Luxembourg in a decision which sheds light on the application of cross-border insolvency principles following the UK’s departure from the European Union.

Barings (UK) Limited and ors v Galapagos SA [2022] EWHC 1633 (Ch)

What are the practical implications of this case?

This is an interesting decision on the application of cross-border insolvency principles post Brexit. As a result of the transition arrangements following the UK’s departure from the EU, the Recast Regulation on Insolvency Proceedings (“Recast EIR”) continues to apply to determine questions of jurisdiction provided proceedings validly described as main proceedings had already been commenced prior to the end of the transition period on 31 December 2020. The focus of this case was on circumstances in which proceedings had been commenced and described as main proceedings prior to that date, however, the CJEU had subsequently determined that the designation as main proceedings was invalid. It is apparent that Courts in England can follow the decision of the CJEU and apply the UK’s Insolvency Regulation which replaced the Recast EIR. It is not necessary for the English Court to wait for the foreign Court to set aside the earlier proceedings itself.

What was the background?

This is a judgment concerning an application to wind up Galapagos S.A. (“GSA”). GSA is a company incorporated in Luxembourg. It was a member of a group of companies whose principal business was the manufacture of heat-exchangers. The ultimate owners of the group are a consortium of private equity funds managed by Triton Investment Management Limited (“Triton”). GSA was not an operating company within the group but was incorporated to facilitate financing transactions. GSA was the borrower of group debt under a revolving credit facility, a guarantee facility and senior secured notes. GSA also acted as guarantor in respect of high yield notes issued by its immediate parent company, Galapagos Holding S.A. (“GHSA”). Under the terms of an intercreditor agreement, the claims of the lenders under the credit and guarantee facilities were ranked first, followed by the senior secured noteholders and lastly the high yield noteholders. A long-running dispute arose thereafter between the senior creditors of GSA and its junior creditors. The senior creditors applied for an order winding up GSA. While that application was pending before the Court, the junior creditors procured the replacement of GSA’s English directors with a German director. That German director brought separate ex parte applications before the Dusseldorf District Court for the opening of insolvency proceedings in that jurisdiction. The English proceedings were then stayed. The German proceedings were referred to the CJEU. The senior creditors argue that the CJEU decision means that GSA’s winding-up can now proceed in this jurisdiction. The junior creditors argue, however, that these proceedings should remain stayed or be dismissed. They argue that unless and until the German Courts have given effect to the CJEU ruling by setting aside the Dusseldorf insolvency proceedings, those proceedings remain the “main proceedings” for the purpose of the Recast EIR.

What did the court decide?

The High Court in England retained exclusive jurisdiction to open main proceedings when the Dusseldorf Court purported to do so in September 2019. The proceedings in Dusseldorf cannot, therefore, be characterised as main proceedings under the Recast EIR. This was the finding of the CJEU and it was not necessary for this Court to wait until the Court in Dusseldorf to set aside its earlier determination that those proceedings were main proceedings. The English Court was entitled to reach that decision itself on the basis of the CJEU’s ruling. This means that the jurisdiction of the Court is not governed by the Recast EIR as there were no insolvency proceedings defined as main proceedings at the commencement of the Brexit transition period. The jurisdiction is, therefore, to be determined by the question of whether GSA’s COMI continues to be in England and Wales, as required by the version of the Insolvency Regulation which now applied in the UK “UK IR”. After setting out a variety of factors drawn from authorities such as Re Swissport Holding International [2020] EWHC 3556 (Ch), the Court concluded that by 22 August 2019, the administration of GSA’s interests had moved from Luxembourg to England. The core management team had been relocated to England, the meetings were either physically based in England or organised remotely from England. The office headquarters had moved to Fareham and those changes had been notified to third parties, including creditors. In exercising its discretion, the Court was satisfied both that GSA has a sufficient connection to England and that there was not only a reasonable possibility of benefit to the senior creditors if a winding up order was made, there was a clear and obvious likelihood of such benefit. A winding up order was, therefore, made.

Case details

  • Court: High Court, Insolvency and Companies List (Ch)
  • Judge: Mrs Justice Bacon
  • Date of judgment: 30 June 2022

Article by Phillip Patterson – first published by LexisNexis


Phillip Patterson

Call: 2008


This content is provided free of charge for information purposes only. It does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.


Please note that we do not give legal advice on individual cases which may relate to this content other than by way of formal instruction of a member of Gatehouse Chambers. However, if you have any other queries about this content please contact: