Can debtors incorporated elsewhere enter into restructuring or insolvency proceedings in the jurisdiction?

Restructuring & Insolvency (2nd Edition)

Denmark Small Flag Denmark

If the debtor’s business activities are carried out outside Denmark, insolvency proceedings may only be commenced against the debtor if the debtor’s local court is in Denmark.

If the debtor’s local court is not in Denmark, but the debtor carries out the business activities through a subsidiary in Denmark, insolvency proceedings may be commenced in Denmark against the subsidiary in question. This will most likely apply to branches if the branch is registered as having a share capital and limited liability.

Please note that if the debtor is subject to restructuring proceedings, insolvency proceeding may be commenced against the debtor in Denmark at the conclusion of the restructuring proceedings even though the debtor no longer carries on a business in Denmark or the debtor’s local court is no longer in Denmark.

China Small Flag China

No, they cannot. According to China’s General Principles of Civil Law regarding enterprise legal persons, an enterprise legal person must have a capital prescribed by Chinese law, have its own articles of association, organizational structure and premises, be able to bear civil liability independently, and have been approved by and registered with China’s competent authorities. Enterprise legal persons also include Sino-foreign equity joint ventures, Sino-foreign contractual joint ventures and wholly foreign-owned enterprises which are established in China, meet all the qualification requirements for a Chinese enterprise legal person and have been approved by and registered with the Chinese authority in charge of industrial and commercial affairs. In sum, an enterprise legal person here means a Chinese enterprise legal person.

The Enterprise Bankruptcy Law applies to enterprise legal persons. Without anything expressly providing otherwise under Chinese bankruptcy law, the enterprise legal persons here refer to Chinese legal persons as well.

Australia Small Flag Australia

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.

Belgium Small Flag Belgium

The courts of a Member State where the debtor has its COMI (or an establishment) may open main (territorial) insolvency proceedings, regardless of the place of incorporation. In the case of legal persons, the COMI is presumed to be the place of the registered office, in the absence of proof to the contrary (Regulation 1346/2000).

With respect to debtors that have their COMI located outside the EU, Belgian courts will have jurisdiction to open (i) principal proceedings, if the main establishment or the statutory seat of the debtor is located in Belgium, and (ii) territorial proceedings, if the debtor has an establishment in Belgium.

The Netherlands Small Flag The Netherlands

Only in case their centre of main interest (COMI) is in the Netherlands.

United States Small Flag United States

The only requirement for a foreign corporation to enter into insolvency proceedings in the United States is that the corporation has a domicile, place of business or property in the United States.
With regards to the possession of property requirement, courts have interpreted it quite broadly, with most any property located in the United States at the time of filing the petition qualifying.

France Small Flag France

  • Companies incorporated in a EU member state
  • As stated above, a company incorporated in another Member State could enter into insolvency proceedings if its COMI is in France.
    However, if such debtor has only an “establishment” in another EU Member State, the courts of that State only have jurisdiction to open “secondary proceedings”, restricted to the debtor’s assets located in that state.

  • Companies incorporated outside an EU Member State
  • When a company has a mere branch or establishment in France (which is not necessarily the COMI), French courts have jurisdiction insolvency proceedings to its benefit.
    French courts even have jurisdiction when the company has business relationships in France or of a “real commercial presence” in France.

  • UNCITRAL Model Law on Cross Border Insolvency
  • The UNCITRAL Model Law on Cross Border Insolvency has not been adopted in France.

Luxembourg Small Flag Luxembourg

Luxembourg courts generally hold that courts in the (non-EU) jurisdiction of the principal establishment of the company have jurisdiction to decide on matters of insolvency regarding that company. In Luxembourg, there is no recognition of jurisdiction based on the localisation of assets or any other connection with a jurisdiction.

Pursuant to the Insolvency Regulation, an EU debtor whose COMI is located in Luxembourg, may enter into restructuring or insolvency proceedings in Luxembourg.

New Zealand Small Flag New Zealand

Section 342 of the Companies Act provides for overseas companies (being a body corporate incorporated outside New Zealand) to be put into liquidation under New Zealand law by the Court. An administrator may be appointed to an overseas company, and a receiver may be appointed under a security agreement, in respect of the assets of an overseas company.

Romania Small Flag Romania

Companies may resort to the insolvency procedures regulated in Romania, but only if they have their headquarters here. If otherwise, the insolvency procedure opened in Romania will be subordinated to the insolvency procedure opened in the state where their headquarters are.

Switzerland Small Flag Switzerland

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.

Updated: April 19, 2018