It was necessary to decide whether two companies, Ci4net.com Inc and DBP Holdings Limited, had centres of main interests in London.
Held: The court addressed the issue of timing: ‘There were differences between counsel as to the approach which the court should adopt to a company which . . . had its CoMI in England whilst it was active in the market place, but which has ceased to trade. Mr Clarke [counsel for the companies] would agree with Ms Stonefrost [counsel for the creditor bank] to the extent that the EC Regulation should be applied in a manner which will discountenance attempts by a company to ‘forum shop’. It is, both would accept, important that trade creditors should know in what jurisdiction they will be able to pursue the assets of the company if it leaves their debts unpaid. It would, Ms Stonefrost said in her oral submissions, ‘be contrary to the policy of the EC Regulation for a company to be able to remove itself from the jurisdiction by ceasing to trade’. This, Mr Clarke said, goes too far. The question of timing is, he said, of importance. Mr Clarke accepts that a more or less cynical removal of the seat of a company’s operations from the EU to a non-EU territory a few weeks or months before the business goes to the wall would not be regarded as working an alteration in the CoMI of the company. There is, however a great difference between that and a restructuring of the business which is carried out for sound commercial reasons long before the question of insolvency proceedings becomes live. In the latter situation the policy against forum shopping does not raise a bar to a change in the company’s CoMI being effected upon the company’s ceasing to trade in the EU.’ and ‘The differences between counsel is, I think, one of emphasis rather than of principle. . . . To the limited extent to which I think there is a material controversy here, I prefer Mr Clarke’s approach. In my judgment Ms Stonefrost comes too close to saying (although she did not in fact say it) that, once a company has a CoMI within the EU, it is stuck with that CoMI on ceasing to trade, notwithstanding the time at which, or the circumstances in which, that cessation occurs.’
‘The notion of the location of a business shifting as its director moves from one country to another does not sit easily with the policy which underlies the EC Regulation. A business must under the EC Regulation have a CoMI and, in my judgment, a CoMI must have some element of permanence.’ and ‘The CoMI of [Ci4net.com Inc] was until at least April 2001 in London, and what has occurred since is not sufficient (even if supported by the presumption in favour of the place of the registered office) to justify a finding that the CoMI is now elsewhere.’
Citations:
[2004] EWHC 1941 (Ch)
Jurisdiction:
England and Wales
Cited by:
Cited – Shierson v Vlieland-Boddy CA 27-Jul-2005
The debtor claimed that he could not be served with an insolvency petition, being resident in Spain.
Held: The court was to look to where was the centre of his main interests to determine whether to open insolvency proceedings. On that basis, . .
Lists of cited by and citing cases may be incomplete.
Insolvency, European
Updated: 28 June 2022; Ref: scu.249854
