Proving COMI: Seeking Recognition Under Chapter 15 of the US Bankruptcy Code

Abstract

Lifland J's decision in Re Bear Stearns High-Grade Structured Credit Strategies Master Fund (Bankr.S.D.N.Y. September 5, 2007) clearly comports with the intent and structure of chapter 15 that the determination of the existence of a foreign main or non-main proceeding is a definitional matter, not a discretionary matter. If a foreign proceeding is neither main nor non-main, it is not entitled to recognition under chapter 15. The same outcome would obtain in England under the Cross-Border Insolvency Regulations 2006. Nevertheless, recognition and assistance under s 426 of the UK Insolvency Act 1986 remain possible - Re Basis Yield Alpha Fund (Master) is a case in point.

Regardless of the position under the EC Insolvency Regulation, the presumption in chapter 15 that a company has its COMI at the place of its registered office is only meant for speed and convenience of proof where there is no serious controversy. It does not have special evidentiary value and does not shift the burden of proof. It is the foreign representative who must prove the location of COMI in all cases. It is suggested that the English court should also adopt the same approach under the Cross-Border Insolvency Regulations 2006.

Keywords: Cross-border insolvency, international insolvency, UNCITRAL Model Law on Cross-Border Insolvency, chapter 15 of the Bankruptcy Code, centre of main interests

JEL Classification: K10, K19, K20, K29, K30, K39, K40, K49