Vol 15 (2018) - Issue 1

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Move It On Over: Intentional Prepetition COMI Shift Does Not Preclude Chapter 15 Recognition (In re Ocean Rig UDW Inc., 570 B.R. 687 (Bankr. S.D.N.Y. 2017))

Introduction
Relief ancillary to foreign insolvency proceedings may be obtained in the United States under chapter 15 of the US Bankruptcy Code (the 'Bankruptcy Code'). However, in order to obtain the maximum automatic relief in the US, the petitioning party – typically a liquidator acting as foreign representative of the non-US proceeding – must establish that such proceeding is pending in the forum where the debtor has its 'centre of main interests' or COMI, with the COMI determination to be made as of the chapter 15 petition date. Courts, including the Second Circuit Court of Appeals, have recognised that determining COMI at the time the chapter 15 petition is filed may open the door for forum shopping or 'COMI manipulation', giving the liquidator the opportunity to move a debtor’s nerve center to take advantage of more favourable restructuring laws.