The Order of 11 October 2023 marks the conclusion of the receivership phase in the long-running dispute between Mad Atelier International B.V. and Axel Manes, concerning the management and ultimate sale of the Atelier de Joel Robuchon restaurant in the DIFC.
What was the specific dispute regarding the distribution of sale proceeds in Mad Atelier International B.V. v Axel Manes?
The lawsuit centered on the enforcement of a judgment against Axel Manes, the beneficial owner of Five Dining Corporation Limited, the entity operating the Atelier de Joel Robuchon restaurant. Following the appointment of Nathan Stubing of FTI Consulting as Receiver on 22 December 2022, the restaurant was sold to ATRO Hospitality Limited on 8 August 2023. The core of this specific application involved the distribution of the proceeds from that sale and the finalization of the Receiver’s accounts.
The Claimant, Mad Atelier International B.V., sought directions from the Court to facilitate the transfer of the sale proceeds held by the Receiver. Simultaneously, the Court had to address the status of the receivership itself and a competing Joinder Application filed by Société Générale Bank-Cyprus. The Court’s order effectively cleared the path for the Claimant to recover the funds while formally terminating the Receiver’s mandate. Regarding the mechanics of the transfer, the Court directed:
The Receiver shall pay the Receipts to a bank account or bank accounts nominated by the Claimant in writing.
The Court further clarified the currency handling for the distribution, noting:
The Receiver and the Claimant shall agree whether the aforesaid sums are transferred in the aforesaid currencies or converted into a single currency prior to transfer.
Which judge presided over the finalization of the receivership in CFI 030/2022?
The Order was issued by Justice Sir Jeremy Cooke, sitting in the DIFC Court of First Instance, on 11 October 2023. Justice Sir Jeremy Cooke had previously overseen the substantive judgments in this matter, including the February 2023 declaration regarding the beneficial ownership of the shares in Five Dining Corporation Limited.
What were the positions of the Claimant and the Joinder applicant, Société Générale Bank-Cyprus, regarding the distribution of funds?
The Claimant, Mad Atelier International B.V., argued for the immediate distribution of the sale proceeds, asserting its right to the funds following the successful sale of the DIFC Restaurant. The Claimant’s position was supported by the fact that the receivership had achieved its primary purpose—the realization of assets to satisfy the judgment debt.
Conversely, Société Générale Bank-Cyprus sought to intervene in the proceedings through a Joinder Application dated 31 July 2023. The bank attempted to assert an interest in the proceedings, likely related to the underlying assets or the proceeds of the sale. However, the Court rejected this attempt, dismissing the Joinder Application entirely and ordering the bank to bear the costs of that specific application. The First Defendant, Axel Manes, was required to cooperate with the Receiver to ensure the orderly wind-down of the entity, as the Court ordered that:
The First Defendant shall do all things reasonably necessary to permit the Receiver to undertake the steps in paragraph 4 hereof.
What was the precise doctrinal issue the Court had to resolve regarding the Receiver’s fees and discharge?
The Court was tasked with balancing the Receiver’s entitlement to remuneration against the Claimant’s right to the net proceeds of the sale. Specifically, the Court had to determine the "maximum total sum" for the Receiver’s fees and expenses, which required a variation of the original Receivership Order. Furthermore, the Court had to define the exact sequence of events for the termination of the receivership, ensuring that the transfer of shares and the Receiver’s resignation as a director occurred only after the distribution of the sale proceeds to the Claimant.
How did Justice Sir Jeremy Cooke exercise his discretion to vary the Receiver’s fees and terminate the receivership?
Justice Sir Jeremy Cooke exercised his discretion by formally adjusting the financial cap on the Receiver’s remuneration to reflect the work performed throughout the receivership period. By varying the cap, the Court provided finality to the Receiver’s accounts, allowing for the distribution of the remaining balance to the Claimant. The Court’s reasoning focused on the completion of the "Reserved Matters" and the successful execution of the restaurant sale.
The Court’s order provided a clear roadmap for the discharge of the Receiver, stipulating:
The maximum total sum for the fees and expenses of the Receiver to be paid from the Receipts (as defined in the Receivership Order) pursuant to paragraph 12(a) of the Receivership Order is varied to USD 565,000.
Following the distribution, the Court mandated the transfer of shares back to the First Defendant and the Receiver’s resignation as a director, after which the Receiver would be fully discharged. The Court emphasized the sequence of these events:
Upon the completion of the steps in paragraph 4 hereof, the Receiver shall be discharged as receiver of the shares in Five Dining and manager of Five Dining.
Which specific DIFC statutes and procedural rules governed the Court’s authority to issue these directions?
The Court exercised its inherent jurisdiction and powers under the Rules of the DIFC Courts (RDC) to manage the receivership and the distribution of assets. While the Order does not cite specific sections of the DIFC Law, the authority to appoint and discharge a receiver and to give directions regarding the distribution of proceeds is derived from the Court’s broad case management powers under the RDC. The Court also relied on the previous Receivership Order dated 22 December 2022, which established the framework for the Receiver’s duties and the definition of "Receipts."
How did the Court apply the principles of cost-shifting to the Joinder Application and the receivership costs?
The Court applied standard cost-shifting principles, holding the unsuccessful party liable for the costs of the Joinder Application. Société Générale Bank-Cyprus was ordered to pay USD 40,000 and GBP 20,000 in costs. Regarding the receivership itself, the Court held the First Defendant, Axel Manes, responsible for the Claimant’s costs of the application and the costs incurred during the receivership. The Court’s order regarding these costs was explicit:
Save where prior costs orders have been made, the First Defendant shall pay the Claimant’s costs of the Claimant’s Application CFI-030-2022/16 and the costs incurred by the Claimant during the receivership, such costs to be assessed by the Registrar on the standard basis if not agreed.
What was the final disposition of the Court regarding the distribution of funds and the Joinder Application?
The Court granted the Claimant’s application for the distribution of the sale proceeds, which included EUR 5,429,601, USD 115,440, and AED 131,218. The Joinder Application by Société Générale Bank-Cyprus was dismissed. The First Defendant was ordered to pay the Claimant’s costs, with an immediate payment on account of USD 90,000 and GBP 51,000 due by 20 October 2023. The Court also mandated the transfer of shares in Five Dining to the First Defendant and the resignation of the Receiver as a director, effectively ending the receivership.
The Court’s instruction regarding the transfer of shares was:
As soon as reasonably practicable but not before making the distribution in paragraph 2 hereof, the Receiver shall: (a) transfer all the shares in Five Dining to the First Defendant.
The Court also set a strict deadline for the payment of costs:
The First Defendant shall pay the sums of USD 90,000 and GBP 51,000 on account of the costs due pursuant to paragraph 9 of this Order by no later than 4pm on 20 October 2023.
What are the practical takeaways for practitioners regarding receivership terminations in the DIFC?
This case highlights the importance of precise sequencing when terminating a receivership. Practitioners should note that the DIFC Court will prioritize the distribution of assets to the judgment creditor before allowing the Receiver to relinquish control of the corporate entity. Furthermore, the case serves as a warning to third parties attempting to join proceedings at a late stage; the Court will strictly scrutinize the basis for such applications and will not hesitate to impose significant costs on unsuccessful interveners. Finally, the use of a "maximum total sum" for Receiver fees provides a useful mechanism for avoiding protracted disputes over remuneration at the conclusion of a receivership.
Where can I read the full judgment in Mad Atelier International B.V. v Axel Manes [2023] DIFC CFI 030?
The full order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0302022-mad-atelier-international-bv-v-1-axel-manes-2-catherine-zhilla-3-nathan-stubing-1
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Mad Atelier International B.V. v Axel Manes | CFI 030/2022 | Primary proceedings |
Legislation referenced:
- Rules of the DIFC Courts (RDC)
- Receivership Order (dated 22 December 2022)