Can debtors incorporated elsewhere enter into restructuring or insolvency proceedings in the jurisdiction?
Restructuring & Insolvency
Companies registered as foreign corporates in Australia could have receivers, administrators or liquidators appointed to them, but it is rare for this to occur. We are not aware of any foreign corporations having initiated a scheme of arrangement.
Yes. A foreign company may be the subject of a scheme of arrangement in the Cayman Islands or be wound up here in the event that it has property located in, or has been carrying on business in, the jurisdiction, acts as a general partner of an ordinary or exempted Cayman Islands limited partnership, or is registered as a foreign company under the Companies Law.
Main Swiss restructuring or insolvency proceedings would not be available to a debtor incorporated elsewhere. Where a foreign debtor is undergoing restructuring or insolvency proceedings outside of Switzerland, a foreign insolvency official would not be authorized to take possession of, or otherwise seek enforcement in, any Swiss assets of the debtor. Rather, Swiss ancillary proceedings will have to be applied for with respect to such assets which leads to a parallel proceeding for Swiss located assets pursuant to the rules for Swiss insolvency proceedings. Requirements for recognition in Switzerland are fairly strict and include, in particular, the requirement that the main proceeding has been initiated at the registered seat of the corporate (rather than its centre of main interests) and the requirement of reciprocity. These rules are currently proposed of being amended. In particular, it is proposed to abolish the requirement of reciprocity, to allow recognition of proceedings which have been initiated at the centre of main interests (rather than the registered seat) and to waive the requirement of ancillary proceedings under certain circumstances. The proposed amendments would align the general regime to the special provisions which are already in force for banks and other financial institutions.
The courts of the EU Member State within the territory of which the centre of the debtor's main interests (COMI) is situated have jurisdiction to open (main) insolvency proceedings (Article 3(1) EU Regulation 2015/848).
Consequently, a debtor incorporated in another EU Member State may enter into insolvency proceedings in Germany, if its COMI is in, or has been moved to, Germany. The COMI is the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties. In case of a company, the place of the registered office is presumed to be the COMI in the absence of proof to the contrary, unless the registered office has been moved to another Member State within the 3-month period prior to the insolvency petition.
Similarly, German courts have jurisdiction to open insolvency proceedings in respect of a debtor incorporated outside the EU if its COMI is in Germany (Sec. 3 Insolvency Act).
However, German courts do not look favorably on forum shopping. Therefore, they tend in such a case to scrutinize whether the COMI is actually in Germany.