UK: Clarity On Cross-Border Conundrum

It is well established that the type of recognition granted by the recognising court under the UNCITRAL Model Law will depend on whether the originating proceedings are 'foreign main' or 'foreign non-main' proceedings, which in turn hinges on the centre of main interests (COMI) of the insolvent entity.

In a ground-breaking case, the English court has followed the precedent set down by the US Bankruptcy Court in undertaking this COMI analysis at the date of the recognition petition, rather than the date that the insolvency proceedings were initiated. This has the scope to significantly simplify the recognition of cross-border insolvencies going forward, particularly in respect of Chapter 11 recognitions in the UK.

The UNCITRAL Model Law

The Model Law has been enacted into the English statute book as the Cross Border Insolvency Regulations 2006 (the CBIR), which states (using the wording of the Model Law) that:

""foreign main proceeding" means a foreign proceeding taking place in the State where the debtor has the centre of its main interests"; and

""foreign non-main proceeding" means a foreign proceeding, other than a foreign main proceeding, taking place in a State where the debtor has an establishment..."

COMI for these purposes has the same interpretation as under the Recast Insolvency Regulation, with the rebuttable presumption being that COMI will be in the jurisdiction of the debtor's registered office. The analysis of whether or not that presumption can be rebutted is largely a fact-based one.

Recently, Reed Smith assisted Toisa Limited (Toisa), a debtor in a Chapter 11 case, in seeking recognition of those Chapter 11 proceedings before the English court under the CBIR. The application came before ICC Judge Burton on Friday 29 March. Having been presented with evidence regarding the COMI of the debtor, the Judge raised the question of when is the appropriate date to consider the COMI of the insolvent entity for the purposes of the CBIR.

The English Approach

The English courts have not previously considered this question in significant detail in reported cases, albeit they appear to have leaned towards the view that that the appropriate time to conduct the COMI analysis is at the date of the initiation of the insolvency proceedings for which recognition is being sort. For example, in the recent case of Videology Ltd., re Cross-Border Insolvency Regulations 2006 it was discussed (although such consideration did not affect the overall judgment) that the appropriate question when considering an application under the CBIR was whether the foreign proceedings for which recognition is sought are in the place that was the debtor's COMI when such proceedings were commenced.

The Chapter 15 Approach

In contrast, this question had been considered previously by the US Bankruptcy Court in the context of Chapter 15 recognition cases, Chapter 15 being the enactment of the Model Law into US law. The US Second Circuit has taken the view in Morning Mist Holdings Ltd v. Krys (Re Fairfield Sentry Ltd) 714 F3d137 (2d Cir. 2013) that the appropriate time to analyse the COMI of the debtor entity is at the time of the Chapter 15 recognition petition, rather than at the time of the initiation of the overseas insolvency proceedings.


Toisa entered Chapter 11 proceedings in January 2017, and since that date it had been managed exclusively from New York, all creditors corresponded with management based in New York, and all strategic decisions and board meetings were held in New York. Overall, there was little argument that since the initiation of the Chapter 11 proceedings, Toisa's COMI was anywhere other than the United States of America. However, prior to the initiation of Chapter 11, the evidence regarding COMI was not so conclusive. Toisa's registered office was (and still is) in Bermuda, and its assets and employees were located around the world albeit that many decisions had been taken out of New York even prior to the Chapter 11 filing, and significant assets had been located in the United States.

It was submitted to the court that, for the following reasons, the Chapter 15 approach should be favoured over the historic approach of the English courts:

  1. The wording of Article 17 of Schedule 1 to the CBIR is couched in the present tense, such that "the foreign proceeding shall be recognised as a foreign main proceeding if it is taking place in the state where the debtor has the centre of its main interests" (emphasis added). This grammatical structure is also reflected in the definitions of 'foreign main proceeding' and 'foreign non-main proceeding' as reproduced above. Therefore, as a matter of statutory interpretation, it would suggest that the relevant consideration is where the debtor's COMI is currently to be found when the application is being heard.
  2. Article 8 of the Model Law stresses the international nature of the legislation, and requires that when it is being interpreted "regard is to be had to its international origin and to the need to promote uniformity in its application". Given the line of US caselaw following Fairfield Sentry, there is strong international precedent that the relevant time to assess COMI is at the time of the recognition application.
  3. It is not unusual for insolvency proceedings to be initiated in a country other than the COMI of the relevant debtor. This is particularly true of Chapter 11 proceedings, where the US bankruptcy courts generally do not require a significant level of connection to the States to accept jurisdiction – often assets (such as a bank account) being held in the jurisdiction will give rise to a sufficient connection for the initiation of Chapter 11 proceedings. In such cases, there is a good argument that COMI shifts following the commencement of Chapter 11, because the debtor comes under the control of the US courts and key positions on the board of the debtor are often taken by US insolvency professionals, shifting the management of the debtor to the US. Given the level of nexus required by the US bankruptcy courts to claim jurisdiction in Chapter 11 proceedings, it is highly feasible that the debtor had neither its COMI, nor an establishment in the jurisdiction at the time that Chapter 11 proceedings were initiated. If this were the case, and the English approach to COMI analysis under the CBIR were to be followed, then such Chapter 11 proceedings would not be eligible for recognition at all, as a court would not be able to class them as either foreign main proceedings or foreign non-main proceedings. It was submitted that this could not have been the intention of the draftsman.

It was, however, also noted as a counter-argument, that the guide to enactment and interpretation that accompanied the Model Law clearly states that when assessing an entity's COMI the appropriate date is the date of commencement of the foreign proceedings, and not the date of the recognition application.

Having weighed the evidence ICC Judge Burton was of the view that the appropriate date on which to determine the COMI of the debtor for the purpose of recognition under the CBIR was the date of the recognition petition, rejecting the argument that the date of the initiation of the underlying insolvency proceedings was the appropriate time. This has the scope to significantly simplify the process of obtaining recognition orders before the English Courts, particularly in circumstances where a period of time has elapsed between the overseas insolvency proceedings commencing and the seeking of recognition.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions