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Federal Court of Australia grants interim stay under the Cross-Border Insolvency Act 2008 (Cth)

The Federal Court of Australia (Rares J) has granted an interim stay on enforcement proceedings in favour of Michele Bottiglieri Armatore SpA (Bottiglieri), an Italian shipping company: Michele Bottiglieri Armatore SpA, in the matter of Michele Bottiglieri Armatore SpA [2021] FCA 795.

Bottiglieri is subject to an Italian concordato preventivo, an Italian debtor in possession process similar to a US Chapter 11 proceeding.  That process contains a moratorium on enforcement action against the company under the process and enables the company to prepare, together with its advisors, a plan for compromise with its creditors.

The UNCITRAL Model Law on Cross-Border Insolvency forms part of Australian law: Cross-Border Insolvency Act 2008 (Cth) (CBIA), s 6.  Pursuant to the CBIA, the Australian courts can grant urgent relief staying execution against a debtor’s assets, pending determination of its application for recognition by the Courts: Article 19.

Bottiglieri’s application came before the Court urgently.  Davy Investment Fund Services Limited (Davy), one of Bottiglieri’s secured creditors, had attempted to arrest one of Bottiglieri’s Post-Panamax vessels, MBA Giovanni (Giovanni) in China.  Davy had also attempted to arrest Giovanni’s sister ship in Quebec.  Giovanni was due to come into port in Newcastle days after the relief was granted.

This decision forms part of the growing body of caselaw under the CBIA pursuant to which the Australian courts have recognised foreign proceedings (or granted urgent relief pending recognition of those proceedings) to ensure that the local insolvency or restructuring process is not frustrated by creditor action in Australia against the Company’s assets.

Karen Petch appeared for the successful applicant, instructed by HWL Ebsworth.

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