Important guidance from the Court on determining a company’s ‘centre of main interests’

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In the recent case of Re Videology Ltd [1], the English High Court considered the factors relevant for determining a company’s centre of main interests (or COMI) and whether it had an establishment in a foreign jurisdiction for the purposes of the Cross-Border Insolvency Regulations 2006. Walker Morris insolvency experts, Duncan Lole and Gawain Moore consider the decision and the practical implications.

The issues

Videology Ltd (the Subsidiary) was incorporated in the UK and its registered office was in London. The Subsidiary belonged to a larger corporate group (the Group) owned by a parent company, Videology Inc., incorporated in Delaware in the US (the Parent).

The case centred on two main issues: (1) determining the COMI of the Subsidiary and the Parent; and (2) the granting of discretionary relief.

Article 17(2) of the UNCITRAL Model Law on Cross-Border Insolvency (given effect in England by the Cross-Border Insolvency Regulations 2006) (the Model Law), provides certain automatic reliefs for debtors when the court in a foreign jurisdiction recognises a proceeding as a ‘foreign main proceeding’.

To be granted, the court must be satisfied that the proceeding is taking place in the same state as where the company has its COMI. A ‘foreign non-main proceeding’ is a proceeding that takes place in a state in which a company does not have its COMI but has an “establishment” [2].


On 10 May 2018, the Subsidiary and the Parent filed voluntary Chapter 11 petitions in the US Bankruptcy Court for the District of Delaware, providing a moratorium against creditor action. On 11 May 2018, two urgent applications were made in the High Court for:

  • Recognition of the Chapter 11 proceedings in relation to both companies as foreign main proceedings under the Model Law; and
  • Discretionary relief under Article 20(6) and/or Article 21(1) of the Model Law (substantially in the form of the administration moratorium under paragraph 43 of Schedule B1 to the Insolvency Act 1986).

The Court’s decision


The judge stated that:

  • The COMI of companies within a group had to be separately assessed;
  • He was satisfied that the Parent’s COMI was in the US and that the US proceedings were therefore foreign main proceedings. The Parent was also granted an order under Articles 20(6) and 21(1) of the Model Law imposing a stay on action against it; and
  • There were no grounds to displace the presumption that the COMI of the Subsidiary was in the UK.
Recognition as a foreign non-main proceeding

Although the Subsidiary’s COMI was in the UK, its connections with the US were sufficient to justify recognition of US insolvency proceedings as ‘foreign non-main proceedings’.

The Court noted that the Subsidiary had dealings with third parties, who perceived the company as being associated with the Group’s headquarters in Baltimore.

Discretionary relief

Foreign non-main proceedings do not bring about the same automatic stay on individual actions against a company as foreign main proceedings. The general assumption is that where a company’s COMI is in the UK, the main insolvency proceedings for that company should also be in the UK.

The judge in this case noted that there should be a good reason to restrict creditors of a company with its COMI in the UK from seeking to commence main insolvency proceedings there.

In light of the circumstances of the case, the Court went ahead and applied an enhanced administration moratorium in order to protect the Subsidiary from creditor claims and to allow the sale of its assets to take place subject to the control and supervision of the US Court, despite no UK insolvency proceedings taking place.

In considering the Court’s granting of this discretionary relief, evidence was provided of the sale of the business and assets of the Subsidiary as part of a coordinated sale of the business and assets of the whole Group. A sale of the Group would result in a higher price and clear benefits were expected to all creditors of the Group. The judge was provided with information as to why the creditors of the Subsidiary would benefit if the US restructuring proceeded, together with evidence as to why the interests of UK creditors would be protected in the US administration process.

WM Comment

This case is a rare and important example of the English Court granting an administration moratorium to an English company with its COMI in the UK, despite no UK insolvency proceedings taking place. The Judge gave his reasons for having exercised his discretion after describing this case as “unusual”. He, correctly, placed great emphasis on the interests of the creditors before deciding to exercise his discretion to grant the UK entity a moratorium.

Where insolvency proceedings are proposed for a group of companies and such companies operate in different countries, the COMI of each company will need to be considered separately and carefully for each individual entity. This case will assist in coming to a conclusion on where the COMI of a company is located, however, ultimately the Court will decide what factors are relevant to COMI based on the facts of each individual case.

Should you have any queries or require any assistance regarding any of the issues raised in this briefing, please contact Duncan or Gawain, who will be very happy to help.


[1] Videology Limited v In the Matter of the Cross-Border Insolvency Regulations 2006 [2018] EWHC 2186 (Ch), 2018 WL 03933699.
[2] Establishment is defined as any place of operations where the debtor carries out an economic activity with human means and goods, which is not of a temporary nature (Article 2, Schedule 1 of the Model Law).
[3] Eurofood IFSC Ltd, Re (C-341/04) [2006] Ch. 508 (02 May 2006) applied.