In a recent ground breaking decision by Judge Catherine Burton in the matter of Toisa Limited, the English courts have recognised the Chapter 11 proceedings of a Bermudian company, ruling the relevant date for determining its centre of main interests (COMI), is the time the recognition application is made.
There are longstanding diverging approaches across the world as to the relevant date to be applied when determining COMI under the Model Law. What is the most appropriate date? Is it the date of the hearing of the recognition application (favoured in Australia), the date of the application for recognition (applied in the USA), or the date of the commencement of the foreign insolvency proceedings (favoured in the EU) and until now, considered the likely English approach?
When Toisa entered into Chapter 11 proceedings in January 2017, the proper location of its COMI was inconclusive. After a period of some two years, when the application for recognition was made, it was clear that its COMI was in the USA. Should this then be the determinative factor?
Despite the Guide to the enactment of the Model law referencing the appropriate date being that of the commencement of the foreign proceedings being recognised, other matters seemed to be more compelling: the drafting of the Model Law itself, the line of US case law arguably creating persuasive international precedent and the purpose of the Model Law to create a foundation of uniformity and universalism, all of which have prevailed. The English courts move away from the EU concept of COMI and become more aligned with the USA.
Whether this decision will help to resolve the uncertainty and inconsistencies across jurisdictions remains to be seen. What it does do is illustrate the common sense and commercial interpretation the English courts will adopt. It will certainly simplify and streamline obtaining recognition orders in the English courts.
The same approach was also adopted in the Singapore courts in the case of Zetta Jet.