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Article 16

Paragraph 3. In the absence of proof to the contrary, the debtor’s registered office,
or habitual residence in the case of an individual, is presumed to be the centre of the
debtor’s main interests.

1. Case 1204: MLCBI 2(d); 16(3); 21


Canada: Superior Court of Justice,
Ontario Case No. CV-12-9719-00CL
Lightsquared LP (Re)
6 July 2012

“The court observed that in circumstances where it was necessary to go beyond the
section 45(2) [article 16(3) MLCBI] registered office presumption, the following
principal factors, considered as a whole, will tend to indicate whether the location in
which the proceeding has been filed is the debtor’s centre of main interests. The
factors are that the location is (a) one in which the debtor’s principal assets or
operations are found, (b) where management of the debtor takes place, and (c)
readily ascertainable by creditors”

“the review was designed to determine that the location of the proceeding, in fact,
corresponded to where the debtor’s true seat or principal place of business actually
was, consistent with the expectations of those who dealt with the enterprise prior to
commencement of the proceedings”.

2. Case 1003: MLCBI 2(a); 2(b); 2(d); 16(3); 17(2)(a)


United Kingdom: Court of Appeal (Civil Division)
No. A3/2009/1565 & 1643 CAO No. 13091
In the Matter of Stanford International Bank Ltd.
29 April 2010

“The judge at first instance had therefore been correct in following the Eurofood
judgement of the European Court of Justice (“ECJ”) in his approach to determining the
proper test to be applied for deciding whether the presumption that the COMI of a
company is at the place of its registered office has been rebutted in any given case [see
MLCBI, article 16, para. 3; the EC Regulation on insolvency proceedings, article 3, para.
1]. Moreover, the judge had been fully correct in concluding that the effect of the ECJ
judgement in Eurofood is that the presumption can only be rebutted by factors which
are both objective and ascertainable by third parties. Equally, the appellate court
endorsed the approach followed by the lower court in confining the factors
ascertainable by third parties to matters already in the public domain and what a
typical third party would learn as a result of dealing with the company, thereby
excluding from consideration any matters which such a party might have ascertained
on enquiry, assuming that such enquiry had been met with an honest answer. The
reason given by the leading judgement of the court of appeal for the exclusion of
factors that might be discoverable on enquiry was that their inclusion would introduce
into this area of the law a most undesirable element of uncertainty. It is also
noteworthy that, in a case where fraud is being practiced in relation to the conduct of
the company’s business, the responses given on behalf of the company to any such
enquiry may be deliberately designed to mislead”

3. Case 1269: MLCBI 16(3)


Canada: Ontario Superior Court of Justice
Case no. CV-12-9767-00CL
Cinram International Inc., Re
26 June 2012

“The Canadian court commenced the proceedings and granted the relief sought. With
respect to the issue of centre of main interests, the court outlined in its order the
evidence provided by the Canadian debtors, noting that it was doing so for
informational purposes only. The facts listed by the court included: that the enterprise
group was managed on a consolidated basis out of the corporate headquarters in
Canada, where corporate-level decision-making and corporate administrative
functions were centralized and that key contracts, pricing decisions, meetings of the
board of directors, cash management functions, corporate accounting, treasury,
financial reporting, financial planning, tax planning and compliance, insurance
procurement services and internal audits, information technology, marketing, and real
estate services, capital expenditure decisions, new business development initiatives
and research and development functions were centralized or took place in Canada”

4. Case 790: MLCBI 2 (a)-(b), 6, 16 (3), 17 (4)


United States: U.S. Bankruptcy Court for the District of Colorado
No. 07-22719-MER
In re Klytie’s Developments, Inc., Klytie’s Developments, LLC
8 February 2008

“It noted that the United States Bankruptcy Code did not define COMI and that 11
U.S.C. § 1516 (c) [Art. 16 (3) MLCBI] established the presumption that the debtor’s
registered office was its COMI. The court looked at the decisions taken in SPhinX and
Tri-Continental, quoting from the latter that the debtor’s COMI was comparable to the
concept of principal place of business. The court used the factors, identified by the
court in Bear Stearns, to determine that the COMI of both debtors was located in
Canada. These factors were (i) location of those who manage the debtor; (ii) location
of the debtor; (iii) location of principal assets; (iv) location of majority of creditors
and (v) jurisdiction whose law applies to most disputes”.

5. Case 791: MLCBI 2 (a)-(f), 15, 15 (2) (c), 16 (3), 17, 17 (4)
United States: U.S. Bankruptcy Court for the District of Massachusetts
Nos. 07-17180-JBR and 07-17518-JBR
In re Tradex Swiss AG19
12 March 2008

“The court noted that the creditors had submitted evidence which sought to rebut the
presumption embodied in 11 U.S.C. § 1516 (c) [Art. 16 (3) MLCBI] that the debtor’s
COMI was located in Switzerland. That evidence included the location of the trading
platform in Boston, the location of assets and a significant number of creditors in the
United States, and the fact that signatory authority was held by the manager of the
United States office. The court viewed the evidence of only the presence in
Switzerland, the office in Switzerland and the Swiss owner of the debtor company, as
insufficient to show that the principal place of business was in Switzerland”

6. Case 760: MLCBI 2, 8, 15, 16 (3), 17 (b), 20, 21, 25-27, 29


United States: U.S. Bankruptcy Court for the Southern District of New York
Nos. 07-12383 & 07-1234 (BRL)
In re: Bear Stearns
30 August 2007

“the court then discussed the requirements of a foreign main proceeding and
examined the presumption of 11 U.S.C. § 1516 (c) [Art. 16 (3) MLCBI] that the debtor’s
registered office is the centre of its main interests. Referring to the legislative history,
the court clarified that this presumption should only be applied in cases without any
serious controversy, permitting and encouraging fast action in clear cases, and that
the burden of proof was on the foreign representative. (….) The European Court of
Justice noted that the “COMI” presumption might be rebutted “particular[ly] in the
case of a ‘letterbox’ company not carrying out any business in the territory of the
Member State in which its registered office is situated” (In re: Eurofood IFSC Ltd., 2006
E.C.R. I-3813, p. 35). The Guide to Enactment explicitly allowed further examination if
the presumption was called into question by the court or an interested party. (…) the
evidence to the contrary: there were no employees or managers in the Cayman
Islands; the investment manager for the Funds was located in New York; the
Administrator running the back-office operations of the Funds was in the United
States along with the Funds’ books and records; and prior to the commencement of
the foreign proceedings, all of the Funds’ liquid assets were located outside the
Cayman Islands companies. The court also noted that the investor registries and
accounts receivable were located outside the Cayman Islands and that no
counterparties to master repurchase and swap agreements were based in the
Cayman Islands. Additionally, there was the possibility that prepetition transactions
conducted in the United States might be avoidable under United States law”.

7. Case 1005: MLCBI 2 (b); 2(c); 2(f); 16(3); 20; 21; 30


United States: Bankruptcy Court for the Southern District of Florida
No. 09-31881-EPK, 09-35888-EPK
In re British American Insurance Company Limited 22 March 2010

“The debtor was an insurance company chartered under the laws of the Bahamas, with
branch operations in many other countries, including Saint Vincent and the
Grenadines. (…) The court considered the location of the debtor’s primary assets and
the majority of its creditors, and found neither location to be in the Bahamas. It also
looked to the perceptions of third parties, since it agreed that the location of a
debtor’s COMI should be readily ascertainable by third parties. The court held that,
taken alone, the debtor’s formation and regulation in the Bahamas and foreign
representative’s actions, who effectively replaced the debtor’s board of directors, did
not constitute sufficient acts to establish the debtor’s COMI in the Bahamas. It
indicated, however, that there might be instances where a foreign representative
remained in place for an extended period, and relocated all of the primary business
activities of the debtor to his location (or brought business to a halt), thereby causing
creditors and other parties to look to the judicial manager as the location of the
debtor’s business”.

Article 2
(f) “Establishment” means any place of operations where the debtor carries out a
non-transitory economic activity with human means and goods or services

“the Model Law focuses on the primacy of centre of main interests and main
proceedings, but recognizes that other tests, such as presence of assets, can be used
to commence local “non-main” proceedings to deal with local assets once the foreign
main proceedings have been recognized (…) Essentially, an establishment is a place of
business, which is not necessarily the centre of main interests” (UNCINTRAL.
Legislative Guide on Insolvency Law. United Nations: New York, 2005, pp. 41-42).
“The emphasis on an economic activity having to be carried out using human resources
shows the need for a minimum level of organization. A purely occasional place of
operations cannot be classified as an ‘establishment’. A certain stability is required.
The negative formula (‘non-transitory’) aims to avoid minimum time requirements.
The decisive factor is how the activity appears externally, and not the intention of the
debtor.” (M.Virgos and E. Schmit, Report on the Convention on Insolvency
Proceedings, Brussels 3 May 1996, para 7.1)

1. Case 1005: MLCBI 2 (b); 2(c); 2(f); 16(3); 20; 21; 30


United States: Bankruptcy Court for the Southern District of Florida
No. 09-31881-EPK, 09-35888-EPK
In re British American Insurance Company Limited 22 March 2010

“The court also found that the debtor had no establishment in the Bahamas pursuant
to 11 U.S.C. § 1502(2), (5) [MLCBI, art. 2, subparas. (c), (f)] and, thus, declined to
recognize the Bahamas proceeding as a foreign non-main proceeding. It was
undisputed that at the time of the filing of the Chapter 15 application, the debtor had
no business operation in the Bahamas other than the foreign representative’s
activities pursuant to his appointment
(…)
The court viewed the SVG proceedings differently because evidence demonstrated
that the debtor owned property in SVG, where it conducted business, retained
employees at its SVG branch where it performed insurance business activity,
maintained account in SVG relating to its insurance business in that country, and had
existing policyholders in SVG. The court thought it clear the debtor had an
establishment in SVG and was thus a foreign non-main proceeding.”

2. Case 1276: MLCBI 2(b); 2(c); 2(f); 8; 16(3); 17


United States of America: United States Court of Appeals for the Fifth Circuit Case
no. 09-20288
In re Ran
27 May 2010

“As to whether the debtor had an establishment in Israel, the court found that he did
not and in response to the suggestion that the insolvency proceeding might itself
constitute the basis for finding the debtor had an establishment in Israel, the court said
that such a proceeding was by definition a transitory action and thus outside the
meaning of “establishment””.
3. Case 755: MLCBI 2 (f), 7, 15, 17 (2)(b), 21 (3), 22 (1)
United States: U.S. Bankruptcy Court Southern District of New York
No. 06-13061 (REG)
In re: Europäische Rückversicherungsgesellschaft in Zürich (European Reinsurance
Company of Zurich)
22 January 2007

“The English proceeding constituted a foreign non-main proceeding: it was pending


where the debtor had an establishment in the United Kingdom according to 11 U.S.C. §
1517 (b) [Art. 17 (2)(b) MLCBI]. The debtor carried out a portion of its business as a
non-transitory economic activity from its office registered in England and had, thus,
an establishment pursuant to the definition in 11 U.S.C. § 1502 (2) [Art. 2 (f) MLCBI]”.

4. Case 760: MLCBI 2, 8, 15, 16 (3), 17 (b), 20, 21, 25-27, 29


United States: U.S. Bankruptcy Court for the Southern District of New York
Nos. 07-12383 & 07-1234 (BRL)
In re: Bear Stearns 30 August 2007

“The court then examined whether the Cayman proceedings constituted foreign non-
main proceedings according to 11 U.S.C. § 1502 (5) [Art. 2 (c) MLCBI] on the basis of an
establishment in the Cayman Islands. The court noted that the debtors did not
conduct any (pertinent) non-transitory economic activity in the Cayman Islands nor
did they have any funds on deposit there before the Cayman Islands’ insolvency
proceedings were commenced”.

5. Case 929: MLCBI 2 (b), 2 (c), 2 (f), 8, 16 (3), 17 (1)(a), 17 (1)(b), 17 (1)(c)
USA: U.S. District Court for the Southern District of Texas
No. H-08-1961
Lavie v. Ran
30 March 2009

“As for the concept of an “establishment” in Israel pursuant to 11 U.S.C. § 1502(2) [Art.
2 (f) MLCBI], necessary to a finding that the foreign proceeding was a “foreign non-
main proceeding” pursuant to 11 U.S.C. § 1502(5) [Art. 2 (c) MLCBI], the court found
that the debtor had no “place of operations” or “economic activity” within Israel,
rejecting the foreign representative’s argument that the foreign proceeding itself
constituted such activity”.