COMI of Jersey companies held to be
in England and Wales
Argument of improper motive generally insignificant where
purpose of administration can be achieved
Three Jersey companies were put into English administration on
the basis that their COMI was within this
jurisdiction. Each company owned a shopping centre in various
cities in the UK and the shopping centres were managed by an
English incorporated entity. The secured lender appointed
administrators who then applied to court for a declaration that
their COMI was in England and accordingly
their appointments were valid.
The sole shareholder and directors cross-appealed to have the
administrators' appointment terminated on the grounds of
improper motive, arguing that it was intended to thwart the
litigation commenced by the companies against the secured lender
two years prior to the appointment of administrators.
The court held that COMI for each of
the entities was England based on a number of factors including
that the assets, asset manager and economic activities of the
companies were in England and not Jersey, the facility and security
documentation was governed by English law and day-to-day dealings
with third parties were also carried out from England.
In relation to improper motive, the court largely drew on a
Northern Irish decision which held (and with which the English
court agreed), that the main touchstone for the court should be the
question of whether the statutory purpose of the administration
could be achieved (irrespective of motive), which, in this case it
appeared that it could. Consequently, the administrators'
appointment was not terminated. In any event the court found that
no improper motive could be established.
The case serves as further helpful analysis of COMI, although of course, by its nature, it
remains a fact-specific analysis. It also touches on a question
which has, to date, had very little case law analysis, being the
scope of the improper motive provision in Schedule B1.
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