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In the Matter of the Companies Act 1981, and in the Matter of N-ReN International Ltd, and in the Matter of Adria Aktiengescellschaft

January 2018 Scott Pearman Companies Insolvency

BERMUDA

SUPREME COURT

WHETHER APPLICANT WAS PERSON ENTITLED TO DISCLAIMED PROPERTY WHICH HAD PASSED BONA VACANTIA TO THE CROWN UPON DISSOLUTION OF COMPANY INDEBTED TO APPLICANT – WHETHER APPLICANT HAD TO SHOW A PROPRIETARY INTEREST OR MERELY A FINANCIAL INTEREST IN DISCLAIMED PROPERTY – WHETHER APPLICANT HAD A PROPRIETARY INTEREST IN DISCLAIMED PROPERTY – COMPANIES ACT 1981 SECTIONS 240(4) AND 263

This was an interesting and unusual application. The applicant, Adria AG, is a company incorporated under the laws of Liechtenstein. By an ex parte summons, Adria sought an order under Section 240(4) of the Companies Act 1981, (“the 1981 Act”) read in conjunction with Section 263 of the 1981 Act, for the vesting of certain property in the company (“the Property”). The Property formerly belonged to another company, N-ReN International Ltd (“N-ReN”), which was incorporated under the laws of Bermuda. When N-ReN was dissolved, the Property reverted bona vacantia to the Crown. The Court sought to determine whether Adria had a proprietary interest in the disclaimed property, as this was a precondition for the making of a vesting order.

Background

Adria entered into a consultancy agreement in 1978 with N-ReN concerning a contract for fertilizer plants in Sudan, which N-ReN had entered into with a Sudan-incorporated company, Sudan ReN.

The Property consisted of:

  • 12 promissory notes issued by Sudan ReN to N-ReN, representing unpaid retention monies payable under the project contract. The promissory notes were guaranteed by the Government of Sudan.
  • Certain debts owed by Sudan ReN to N-ReN under the project contract and the right to demand repayment thereof.
  • ownership interest in the company.

The promissory notes were held in escrow for the payment of N-ReN’s debt to Adria for consultancy services.

In 1994 attorneys were appointed to wind down N-Ren’s affairs and complete contracts with creditors, chiefly Adria. In 1995, a Share Transfer Contract and a Deed of Transfer were drawn up to transfer the Sudan ReN shares and full ownership of the promissory notes respectively from N-ReN to Adria, to discharge the outstanding debt.

However, the promissory notes became subject to a United States sanctions regime prohibiting transactions with Sudan, which prevented their release to Adria. The sanctions were in place from 1997 until January 2017.

The promissory notes were released to Adria in March 2017 at which point the company began arbitration proceedings in the International Chamber of Commerce against Sudan ReN and the Government of Sudan (“the ICC Respondents”) to enforce Adria’s rights in relation to the Property.

 

To continue reading full articles in PDF format:
In the Matter of the Companies Act 1981, and in the Matter of N-ReN International Ltd, and in the Matter of Adria Aktiengescellschaft

 


Scott Pearman
Director

Bermuda   +1 441 294 5925


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"Few firms can come close to Conyers on one critical metric, and this is the breadth of the client base."
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EDITOR & HEAD OF LITIGATION BERMUDA

Christian R. Luthi
Tel: +1 441 298 7814
Email: christian.luthi@conyersdill.com


Head of Litigation British virgin islands

Mark J. Forte
Tel: +1 284 852 1113
Email: mark.forte@conyersdill.com


Head of Litigation Cayman Islands

Paul Smith
Tel: +1 345 814 7777
Email: paul.smith@conyersdill.com


HEAD OF THE ASIA DISPUTES & RESTRUCTURING GROUP

Nigel K. Meeson, QC
Tel: +852 2842 9553
Email: nigel.meeson@conyersdill.com

Offshore Cases

In the Matter of the Companies Act 1981, and in the Matter of N-ReN International Ltd, and in the Matter of Adria Aktiengescellschaft

04 January 2018 Scott Pearman

BERMUDA

SUPREME COURT

WHETHER APPLICANT WAS PERSON ENTITLED TO DISCLAIMED PROPERTY WHICH HAD PASSED BONA VACANTIA TO THE CROWN UPON DISSOLUTION OF COMPANY INDEBTED TO APPLICANT – WHETHER APPLICANT HAD TO SHOW A PROPRIETARY INTEREST OR MERELY A FINANCIAL INTEREST IN DISCLAIMED PROPERTY – WHETHER APPLICANT HAD A PROPRIETARY INTEREST IN DISCLAIMED PROPERTY – COMPANIES ACT 1981 SECTIONS 240(4) AND 263

This was an interesting and unusual application. The applicant, Adria AG, is a company incorporated under the laws of Liechtenstein. By an ex parte summons, Adria sought an order under Section 240(4) of the Companies Act 1981, (“the 1981 Act”) read in conjunction with Section 263 of the 1981 Act, for the vesting of certain property in the company (“the Property”). The Property formerly belonged to another company, N-ReN International Ltd (“N-ReN”), which was incorporated under the laws of Bermuda. When N-ReN was dissolved, the Property reverted bona vacantia to the Crown. The Court sought to determine whether Adria had a proprietary interest in the disclaimed property, as this was a precondition for the making of a vesting order.

Background

Adria entered into a consultancy agreement in 1978 with N-ReN concerning a contract for fertilizer plants in Sudan, which N-ReN had entered into with a Sudan-incorporated company, Sudan ReN.

The Property consisted of:

  • 12 promissory notes issued by Sudan ReN to N-ReN, representing unpaid retention monies payable under the project contract. The promissory notes were guaranteed by the Government of Sudan.
  • Certain debts owed by Sudan ReN to N-ReN under the project contract and the right to demand repayment thereof.
  • ownership interest in the company.

The promissory notes were held in escrow for the payment of N-ReN’s debt to Adria for consultancy services.

In 1994 attorneys were appointed to wind down N-Ren’s affairs and complete contracts with creditors, chiefly Adria. In 1995, a Share Transfer Contract and a Deed of Transfer were drawn up to transfer the Sudan ReN shares and full ownership of the promissory notes respectively from N-ReN to Adria, to discharge the outstanding debt.

However, the promissory notes became subject to a United States sanctions regime prohibiting transactions with Sudan, which prevented their release to Adria. The sanctions were in place from 1997 until January 2017.

The promissory notes were released to Adria in March 2017 at which point the company began arbitration proceedings in the International Chamber of Commerce against Sudan ReN and the Government of Sudan (“the ICC Respondents”) to enforce Adria’s rights in relation to the Property.

 

To continue reading full articles in PDF format:
In the Matter of the Companies Act 1981, and in the Matter of N-ReN International Ltd, and in the Matter of Adria Aktiengescellschaft

 


Scott Pearman
Director

Bermuda   +1 441 294 5925


 

EDITOR & HEAD OF LITIGATION BERMUDA

Christian R. Luthi
Tel.: +1 441 298 7814
Email.: christian.luthi@conyersdill.com


Head of Litigation British virgin islands

Mark J. Forte
Tel.: +1 284 852 1113
Email.: mark.forte@conyersdill.com


Head of Litigation Cayman Islands

Paul Smith
Tel.: +1 345 814 7777
Email.: paul.smith@conyersdill.com


HEAD OF THE ASIA DISPUTES & RESTRUCTURING GROUP

Nigel K. Meeson, Q.C.
Tel.: +852 2842 9553
Email.: nigel.meeson@conyersdill.com