What and where is a company's ‘centre of main interest’ – its COMI – and why should you care? This is not an esoteric question but a live issue in determining which nation's courts and laws deal with international insolvency issues including administration and liquidation.

When executing public M&A transactions, dealmakers need to understand local market practice as well as the local regulatory environment.

In light of the UK’s cram down and director-friendly processes, in particular its scheme of arrangement model, major European economies such as France, Germany and Italy have worked hard to develop regimes that give greater emphasis to pre-insolvency alternatives. These new regimes create cram down mechanisms and encourage debtor-in-possession (DIP) financings, ultimately aiming to make restructuring plans more accessible, more efficient, and crucially more reliable; essentially more in tune with the Anglo-American approach to insolvency and restructuring.

Europe has struggled mightily during the last several years to triage a long series of critical blows to the economies of the 28 countries that comprise the European Union, as well as the collective viability of eurozone economies. Here we provide a snapshot of some recent developments regarding insolvency, restructuring, and related issues in the EU. 

Chapter 11 focuses on preserving reorganization or going concern value over liquidation value. As a corollary, Chapter 11 assumes that the most efficacious way to achieve that result is to retain management and enable multiple outcomes either through a plan of reorganization, a series of going concern sales and even a liquidating plan. Chapter 11 enables a wide range of proposals to be put into a reorganization plan, including having the company and its management survive the process.

Consensual restructuring continues to gain ground as the “go to process” for over leveraged and distressed business.

Marex Financial Limited v. Carlos Sevilleja Garcia [2017] EWHC 918 (Comm)

This recent decision on a jurisdictional challenge has provided greater clarity and potentially created a tortious cause of action where a debtor dissipates assets prior to judgment and subsequent freezing order.

Background

Budniok v Adjudicator, Insolvency Service [2017] EWHC 368 (Ch)

Chief Registrar Baister overturned the Adjudicator's decision in refusing to grant a Bankruptcy Order where the Debtor's COMI was an issue.

Mr Budniok, a German citizen who had recently moved to London, applied online for a Bankruptcy Order in England. After several requests for further information, the Adjudicator was not satisfied Mr Budniok's centre of main interests ("COMI") was in England and as such refused the application. Mr Budniok appealed.

In Shlosberg v Avonwick Holdings Ltd [2016] EWHC 1001 (Ch), Mr Shloesberg applied for an order restraining Dechert (a firm of solicitors) from acting for Avonwick (the first respondent) and Mr Shloesberg's Trustees in bankruptcy (the third respondents). 

In Cook v Mortgage Debenture, Mr Cook applied to be joined to a proceeding that was being continued by a claimant company after it had been placed into administration.  The issue was whether the Court's consent was required on the basis that the application was against a company in administration (the English legislation being similar to section 248 of the Companies Act 1993).  The Court concluded that, while the moratorium covered legal proceedings against a company in administration or liquidation, it does not cover defensive steps in proceedings brought (or contin