In the matter of Fergal O’Mahony (2012) (unreported)    
While a debtor's "roots of insolvency" were in Ireland, his COMI was in London    

The High Court found that a debtor (O)'s COMI was in England not Ireland, so it had jurisdiction to make a bankruptcy order and open main insolvency proceedings.

The respondent (N), an Irish bank and one of O's creditors, claimed that O's change in COMI was merely illusionary and that O had not informed them that he intended to live permanently in another jurisdiction.

O was subjected to substantial cross-examination by N's barrister as a result of the practice developed in the High Court of adjourning bankruptcy hearings, to allow creditors to be informed and make representations if they so wish.

O had lived in Ireland, working as a property developer. In April 2010, following the crash in property values in Ireland, O decided to find work in England. O had separated from his wife in 2009 and, as a result, decided in September 2010 to relocate to England permanently. He continued to spend considerable time in Ireland; this, O claimed, was in order to spend time with his children.

N had submitted that O's "roots of insolvency" were in Ireland; his secured and unsecured creditors, solicitors and accountants, assets, companies and partnerships were Irish and that he should be subject to the harsher Irish insolvency regime. The Court agreed but held that this was just one of the factors to be considered and did not tip the scales when considering O's COMI.

The Court found (comparing the activities of Mr Quinn in IRBC v Quinn) that O had derived no income or financial benefit from any dealings of assets vested in the Irish National Asset Management Agency (NAMA). The only entity with a financial interest in those assets was NAMA.

The Court found that O’s economic activities were carried out in London when the bankruptcy petition was presented. Evidence showed that O worked in London for an English company and received an income from that company. His bank statements showed spending in England.

The Court held O had "emotional interests" in Ireland. O's habitual residence was in London (via evidence of tenancy, employment, banking, tax, spending and healthcare); this was ascertainable by third parties and potential future creditors. O's COMI was also ascertainable to third parties, including N, with particular reference made to a draft business plan submitted to NAMA in 2011, in which he clearly identified his address as London. Looking at the matter in the round, O's COMI was in England.
Cortefeil SA v MEP 11 Sarl [2012] EWHC 2998 (Ch)    
High Court convenes meetings of creditors to vote on a scheme to amend English-law loan facilities for two companies in Spain and Luxembourg    
Two associated companies based in Spain and Luxembourg applied to the High Court for permission to convene meetings of their creditors to vote on their respective schemes of arrangement. The schemes proposed to amend and extend English-law loan facilities.

The Court had to consider: (i) whether it had scheme jurisdiction over the companies in Spain and Luxembourg; and (ii) whether the proposed voting classes into which creditors had been divided were correctly constituted. Creditors should be divided into classes such that they can vote as a class with a view to their common interest.

The loan agreement had five facilities; the Spanish company borrowing under three of the facilities (A, B1 and a revolving credit facility (RCF)) and the Luxembourg company borrowing under two facilities (B2 and B3). The Spanish company proposed to divide its creditors into two classes, the first comprising facility A creditors and the second comprising B1 and RCF creditors. The Luxembourg company proposed just one class so that B2 and B3 creditors would vote together.

The Court held that it had jurisdiction as the proposed schemes would amend the terms of the loan agreement as it contained an English jurisdiction provision. This provided a significant and sufficient connection between each company and the UK, following the guidelines set out in Re Rodenstock. Accordingly, the Court had jurisdiction to wind up the companies, which is a condition of the Court's scheme jurisdiction. Furthermore, the Court held that the proposed voting classes into which creditors had been divided were correctly constituted.
Updates from around the World    

The Government's Insolvency Service has released insolvency statistics for the third quarter (Q3) of 2012. The number of compulsory liquidations and creditors’ voluntary liquidations in England and Wales decreased by 2.8% from the previous quarter and by 6.6% from Q3 2011. Individual insolvencies decreased by 7.2% compared to Q3 2011. In the 12 months ending Q3 2012, approximately 0.7% of all active registered companies went into liquidation and approximately 1 in 390 people became insolvent. Average annual rates over the past 25 years are 1.2% of active registered companies and 1 in 1,600 people.
Our September 2012 bulletin referenced the Advocate General's Opinion in Radziejewski v Kronofogdemyndigheten i Stockholm (C-461/11). The Court has now made its preliminary ruling: Article 45 TFEU must be interpreted as precluding national legislation, which makes the grant of debt relief subject to a condition of residence in the Member State concerned.
Oltchim, one of Romania’s largest chemical technology firms, faces insolvency before the end of 2012, if the Government withdraws its assistance from the company after the country’s December elections. Privatisation of the nationalised company has already been ruled out, with private sector investors showing no interest in taking on its rising liabilities. The IMF is reported to have raised opposition to further state aid, which would leave the company with no other option but to file for insolvency.
Kodak has confirmed that it has reached a $793 million financing deal with bondholders that could take it out of bankruptcy. Kodak stated that the deal is contingent on Court approval and on the company receiving at least $500 million for a patent portfolio it has been trying to sell for more than a year. If the deal goes through, Kodak would be restructured such that it would focus on its commercial imaging businesses, and largely be out of the consumer sector.

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