Vol 22 (2025) - Issue 6

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Where is the COMI of a US Company? Considerations for Chapter 15 Recognition of Foreign Proceedings Involving US Companies

Synopsis
Managing and restructuring multi-national businesses poses significant complexities due to the varying legal, economic, and operational landscapes in different jurisdictions. Each country has its own insolvency laws, which can result in a fragmented and inefficient approach when a corporate group faces financial distress.
Multiple insolvency proceedings across countries can lead to conflicting decisions, higher costs, and prolonged resolution times. Therefore, using one main avenue for restructuring, and seeking recognition of that proceeding in relevant jurisdictions, can provide a streamlined and coherent path for reorganisation.
However, achieving such recognition requires consideration of each jurisdiction's criteria for recognising foreign proceedings, especially the assessment of each company's center of main interests ('COMI').
Chapter 15 of the United States Bankruptcy Code provides a mechanism for companies subject to foreign insolvency proceedings to have those foreign proceedings recognised in the United States ('US'). Recognition requires the company to have either its COMI (for recognition as foreign main proceedings) or establishment (for recognition as foreign nonmain proceeding) in the jurisdiction in which the proceeding sought to be recognised is pending. What factors are relevant in determining whether a US company has its COMI or establishment outside of the US? The Giftcraft and Black
Press cases provide helpful guidance.
At issue in Giftcraft and Black Press was the COMI of various US subsidiaries of Canadian companies.
In Giftcraft, Chief Judge Glenn of the US Bankruptcy Court for the Southern District of New York, found that US subsidiaries of a Canadian home goods company that acted more as arms of a broader corporate structure had their COMI in Canada. On the other hand, in Black Press, Judge Walrath of the US Bankruptcy Court for the District of Delaware found that the three US subsidiaries of a Canadian news publishing company had their COMI in the US, due to their significant operational independence from the parent company and economic impacts limited to the US. There, recognition was denied both as a foreign main proceeding and in the alternative as a foreign nonmain proceeding.