The US Bankruptcy Court for the Southern District of New York has dismissed a case filed under Chapter 15 of the US Bankruptcy Code as the debtor's centre of main interest ("COMI") was not in the jurisdiction where the initial Liquidation was filed.

Creative Finance Ltd was incorporated in the British Virgin Islands in 1995. However the Company's main trade occurred in England, Dubai and Spain. In December 2013 the Company filed for Liquidation in the BVI, being its place of incorporation, and a Liquidator was duly appointed.

In February 2014, the Liquidator sought recognition of the Liquidation in the US under Chapter 15 of the US Bankruptcy Code. If granted, this would allow the Liquidator to seek relief from the US courts in respect of various disputes. In particular one of the Company's debtors ("Marex") had brought proceedings in England and a draft judgment was circulated ordering the Company to pay Marex in excess of $5.6 million. Prior to the Judgment being handed down the Company transferred out all liquid assets in the Company's UK bank accounts (over $9.6 million).

The Company was then placed into voluntary Liquidation in the BVI with only sufficient funds to comply with the BVI minimum requirements, leaving nothing available to pursue or even investigate the transfer of the $9.6 million.

If granted the recognition would preclude Marex from executing its judgment against any assets held by the Company in the US.

Under Chapter 15, in order for the US courts to recognise the foreign case it must be shown that the debtor has its COMI where the initial case was filed, in this case the BVI, on the date of the filing of the Chapter 15 petition. Ultimately, as envisaged by the decision in Fairfield Sentry, this may allow for a debtor to alter their COMI in between the initial case filing and a subsequent Chapter 15 petition.

In the present case, Judge Gerber held that prior to filing for insolvency the Company's COMI was not in the BVI as it was almost certainly in one of the jurisdictions where it carried out business. The Court therefore had to consider if its COMI had shifted following the appointment of Liquidators as a result of anything done by the Liquidators in the interim period.

In particular, the Liquidator had not collected any assets of the Company, settled any claims nor paid any taxes but had merely completed "the minimum functions required by the BVI statute". The Court therefore held that the work that the Liquidator had done in the BVI since the filing of the initial case was insufficient to establish that the BVI had become the Company's COMI and dismissed the case.

As an aside, the Court also considered that the bad faith shown by the Company would have been sufficient if required to justify a refusal to grant recognition but did not need to examine this aspect in detail given that the Company did not get over the first hurdle of establishing COMI in the BVI.