The location of a company’s registered office is not always an indication of where it has its centre of main interest (COMI). The issue can be of crucial importance to insolvency practitioners, as one High Court case revealed.
The case concerned three companies that were registered in Jersey but each of which owned a shopping centre in England. A building society that had provided finance to the companies under a facility agreement purported to appoint administrators in respect of all three of them on the basis that they had failed to repay outstanding loans and owed more than £106 million.
The companies submitted that their COMI was in Jersey and that the administrators’ appointment was thus invalid. In rejecting those arguments, however, the Court noted that they were single purpose vehicles and were wholly owned by an English-registered company. Although they held their board meetings in Jersey, they did not carry on any trading operations there and had no employees of their own.
The companies’ principal assets, the shopping centres, were located in England and they were managed day-to-day from an office in London. The facility agreement was governed by English law and incorporated an English jurisdiction clause. The Court also rejected arguments that the building society had an improper motive in appointing the administrators. The ruling that the companies had their COMI in England opened the way for the continuation of the insolvency proceedings in this country.