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Irwin Mitchell Advise As German Wool Wholesaler Goes Into Administration

Begbies Traynor Now Working With The German Employees And Advisers


David Shirt, Press Officer | 0161 838 3094

A German subsidiary of a Keighley-based distributor of knitting yarns and patterns that ceased trading at the end of 2017, has been placed into administration.

Lee Lockwood of Begbies Traynor and Ray Claughton of Rushtons Insolvency were appointed as joint administrators of Designer Yarns (Deutschland) GmbH earlier this month.

The appointment was made via an application to the English Courts using the powers set out under EC Regulation 2015/848.

This enables a company whose centre of main interest (COMI) is within a different EU state to that of its registration, to be subject to insolvency proceedings in the territory of its COMI.

In this case, on 14 December 2017, Julian Pitts of Begbies Traynor and Ray Claughton had been appointed as joint administrators over Designer Yarns Ltd (DYL).

The Yorkshire-based business had suffered as a result of higher costs and customers having better access to manufacturers.

The German company was a wholly owned subsidiary of DYL which was used to sell wool on the continent, but had also struggled in recent years and had been supported by DYL.

When DYL ceased trading, the German business had no financial support and no supply of wool and was, therefore, unable to continue trading.

The German staff at the company had been managed by a UK-based director and were therefore not well placed to be able to seek German insolvency protection.

Under German insolvency rules, a large debt due to DYL from the company would also have been treated as subordinate to all other creditors' claims which is not the case in UK law. The director and the administrators of DYL therefore felt it was in the best interests of the company and its primary creditor to seek the application of English insolvency proceedings.

Andrew Walker of Irwin Mitchell Solicitors in Leeds assisted the administrators in assessing the complex factors determining the COMI of the company before making an application to the English Courts.

Joint administrator Lee Lockwood said: "For English administrators to be appointed over a foreign company is a relatively rare occurrence. We were able to satisfy the courts that the German company's COMI was in England meaning an English administration order was appropriate.

"We are now working with the German employees and advisers within the territory to ensure statutory matters are complied with both in England and German as well as ensuring that employees in the territory are assisted and assets realised."

He added: “A personal first for me - an appointment over a non UK company using EC Regulations. Challenging case but I was assisted by a strong internal network and solid advice from Andrew Walker at Irwin Mitchell.

Our Commercial solicitors can help you across a wide range of issues. For more information around insolvency and expert advice from our solicitors, visit our Restructuring and Insolvency page.