As the administration of the Collins & Aikman group of companies moves to the point of creditor distributions, a further High Court decision in this matter has been handed down which has broad implications for the efficient conduct of European group insolvencies in the context of the European Insolvency Regulation (EIR). The judgment delivered by Mr Justice Lindsay on 9 June, 2006, in relation to distributions in administration firmly establishes England as the most flexible and pragmatic European jurisdiction through which to conduct a group-wide insolvency under the EIR.

In May 2005, Collins & Aikman, a global automotive components manufacturer, filed for Chapter 11 reorganisation in respect of its US operations. On that filing, the US companies withdrew their financial support for the European group and on 15 July, 2005, the English High Court placed 24 of Collins & Aikman's European companies in 10 European countries into an English administration on the basis that the centre of main interests of each was in England, and accordingly that each of those proceedings were main proceedings for the purpose of articles three and four of the EIR.

By recognising that the European group operated as a cohesive unit, the joint administrators and their lawyers believed that the maintenance of English administration proceeding as the single, main proceeding would significantly improve the ability for the administrators to achieve the statutory purposes of the administration. In this context, the administrators had a real concern that the opening of secondary proceedings in the local European jurisdictions and the resultant appointment of local insolvency practitioners (while specifically authorised by the EIR) would fragment the group-wide process, leading to the absence of a common strategy and increased costs to the estate. Critically, they also believed it would ultimately negatively impact the prospect of effecting a value enhancing sale of all, or substantially all, of Collins & Aikman's European operations to a single, or as few purchasers, as possible.