Key Points

  • COMI of Jersey companies held to be in England and Wales 
  • Argument of improper motive generally insignificant where purpose of administration can be achieved

The Facts

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.

Decision

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.

Comment

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.

Thomas & another v Frogmore Real Estate Partners GP1 Limited & others [2017] EWHC 25 (Ch)