The company has long history, Signore.

It was relocated 3 months

ago entirely for bankruptcy tourism
The new definition of the center of main interests as a
measure to prevent forum shopping
Professor Dr Georgios Triantafyllakis
Faculty of Law, Democritus University
,
forum shopping
(COMI) ,

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(Single Market)
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( 2007) 1346/2000
(Insolvency Regulation), , , (
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(debtors friendly, .), ,
( ) (Comi migration)
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, COMI,
(maximizing value)
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forum shopping ( )
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, prepacks ,
(race to the top).
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forum shopping,
(race to the bottom),
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. COMI
(
) ( , senior and secured creditors),
(unsecured and subordinated creditors),
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bankrupts.
restructuring capital of Europe Delaware
:
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Wind Hellas, (
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( 2009),
32 . 67 . ,
Wind 3,2 , Wind Hellas.

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(administration) , Hellas II,
, partnership,
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, Hellas II,
(administration order)
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(subordinated).

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, prepackaged administration,
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, Hellas II
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Lewison
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(most importantly, all restructuring
negotiations between the company and its creditors had taken place in London).
companys head office, ,
, .
Paraphrasing the words of Lord Denning in the US case Smith Kline French
Laboratories v. Bloch [19831 1 WLR 730 at 733 (CA) As a moth is drawn to the
light, so is a litigant drawn to the UK. If he can only get his case into their courts,
he stands to win a fortune.
Application of EIR
ratione materiae
- Collective
insolvency
proceedings
(divestment of the
debtor and the
appointment of a
liquidator)
ratione personae
company or
legal person
Natural persons
-Professionals
-- consumers
Ratione loci
COMI
International
element
(assets, creditors,
activities of
multinational
firms)
Forum
(jurisdiction)
Lex concursus
(lex fori = applicable
law (Art. 4 EIR)
Connecting for the
determination of
international
jurisdiction within EU
Cross border insolvency
Conflict of rival theories
Territoriality
(state sovereignty)
Insolvency procedures are
limited within one jurisdiction
Cons:
-Not efficient and effective in
order to maximize the net
volume of assets
-Conflicts with:
a) internal/single European
market
b) par condicio creditorum
principle
Universalism
Insolvency procedures include the entirety of
debtors assets (even if located in other MS)
Pros:
-better coordination of restructuring in all MS
-efficient and effective administration of cross
border proceedings (1,8,16,19,20)
maximization of net assets
Cons:
-Lack of certainty and foreseeability
-unsecured creditors interests not fully
protected
Compromise
(limited universalism)
COMI
(universalism)
Secondary proceedings
(territoriality)
COMI: the place where the debtor
conducts the administration of his interests
on a regular basis and is therefore
ascertainable by third parties
Head office
(real seat theory)
on a regular basis
(foreseeability, legal
certainty)
Objective criteria:
-General supervision,
strategic control,
place of BoDs
meetings, internal
accounting, HR
ascertainable by third parties
-intensive control visible by
creditors
-presence of immovable property
-creditors are notified of the change
of headquarters
-reorganization negotiations took
place in the new COmi

FORUM
III.COMI: in general
COMI II
Presumption
Professionals etc: principal place
of business
Other (e.g. consumer): habitual
residence (corpus not animus)
Registered office (law of
incorporation)
F
o
r
u
m

S
h
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p
p
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g
IV. COMI: Presumptions
V. FORUM SHOPPING: A fundamental contradiction?
[Recital (4) of Regulation 1346/2000: It is necessary for the proper functioning of the internal market
to avoid incentives for the parties to transfer assets or judicial proceedings from one Member State to
another, seeking to obtain a more favourable legal position (forum shopping)]
On the other hand, accepting the law of registered office (law of incorporation), as the governing law
for cross-border insolvency issues (presumption of Art.3), opens the door for regulatory competition
in bankruptcy law, between MS of EU (as to who would provide the most favorable regime) and
promotes forum-shopping.

Regulatory competition
(UK as favorable forum)
Advantages
-innovative power of
competition (Hayek)
-better restructuring
environment
-anti-suit injuctions
-timing of procedure (UK:
1,45 m., F: 3,05 m., D: 3,92 m.
-benefits from prepackaged
schemes of arrangements
-more efficient forum
Forum shopping creates
negative externalities
(especially for unsecured or
subordinated creditors,
weak groups (see BGH
30.3.2000 VII ZR 370/98)
- Lack of foreseeability
- Additional costs
- Difficult to investigate
-Evidence of Banks
satisfaction:
UK: 92%
F: 65,6%
D: 67%
Race to nowhere?
Whereas Recitals 4 and 5 discourage any kind of forum shopping, EIR not only lacks relevant provisions
to that direction, but it includes provisions for the determination of COMI- that seems to encourage
forum shopping
VI. Forum shopping as violation of EU law
Shopping for a particular insolvency regime is not per se illegal.
The courts allow COMI shifting in appropriate circumstances, acknowledging that taking advantages of
another countrys insolvency system may be commercially crucial and is merely the optimisation of
procedural possibilities (Opinion of Advocate General in Case C-1/04 Susanne Staubitz-Schreiber)
Under what circumstances a forum shopping (COMI shift) could amount to an abuse of freedom of
establishment (bad)?
Should any Comi shift, whether faked or real, be considered as abuse of EU law?
Is only faked Comi shift bad?
The following distinction is proposed:
-good forum shopping which occurs where a debtor moves Comi to benefit creditors
- bad forum shopping which occurs where the debtor moves Comi at the cost of creditors
Abusive
- Use of law contrary to its purpose
(intention for abuse is not necessary)
COMI migration is not oriented to a better
insolvency regime that would coordinate in a
more efficient way the insolvency proceeding
and maximize the net assets
But
to benefit the debtor (or certain creditors) at
the expense of others (especially the
unsecured and subordinated creditors
violation of par condicio creditorum principle.
Note: BGH 20.3.1996 when an insolvency
application took place within three weeks after the
migration (abusive behaviour)
Kinds of forum
shopping
Opportunistic
Legitimate
Initiate insolvency
proceedings to another MS,
seeking to obtain a more
favourable legal position, not
to the detriment of others.
Faked
(fraudulent)
Box-office
company
Opinion Of Advocate General Colomer in Case C-1/04 (Staubitz-Schreiber)
71. If forum shopping is defined as the search by a plaintiff for the international jurisdiction most
favourable to his claims, there is no doubt that, in the absence of legal uniformity in the different
private international law systems, that phenomenon must be accepted as a natural consequence
which is not open to criticism.
72. Thus the dispute is dealt with at the place which is most suitable for reasons of substance and
procedure. Forum shopping is merely the optimisation of procedural possibilities and it results from
the existence of more than one available forum, which is in no way unlawful.
73. However, where forum shopping leads to unjustified inequality between the parties to a dispute
with regard to the defence of their respective interests, the practice must be considered and its
eradication is a legitimate legislative objective.

Kinds of forum shopping
Opportunistic
Opening of insolvency
proceeding in a MS where the
debtor, although not
previously active, moved,
while in the vicinity of
insolvency, in order to obtain a
more favourable position (see
Recital 4)
Faked (fraudulent)
Abusive
- Use of law contrary to its
purpose
(intention for abuse is not
necessary)
COMI migration is not oriented to
a better insolvency regime that
would coordinate in a more
efficient way the insolvency
proceeding and maximize the net
assets
But
to benefit the debtor (or certain
creditors) at the expense of others
(especially the unsecured and
subordinated creditors
violation of par condicio
creditorum principle.
Illegal
COMI: a genius or an inherently fuzzy, ambiguous and maniputable concept ?
There is no doubt that COMI has become a magical word in the international insolvency literature and
practice. It is not a coincidence that in the vast majority (70%) of case law the determination of COMI,
and the fatal question where is the COMI, are the key point of every legal dispute.
The main interpretation problems that give rise to legal uncertainty, could be briefly summarized as
follows:
1. COMI refers to the legal and/or operational headquarters?
2. What constitutes third persons? The members of BoDs, the employees of affiliated companies or
creditors? Which creditors? The average creditor? The majority of them (by number or value)?
The old and/or new creditors?
3. How easily is the presumption that COMI is the place of the registered office rebuttable?
[Case-law on Comi is not very clear (it rules out letter-box companies or front subsidiary) and
repeats in a tautological way recital 13].
4. How can the transfer of the COMI of a company in distress (in the vicinity of insolvency) for the
purpose of benefit from the best insolvency law regime- be compatible with Recital 13 that
states that COMI should correspond to the place where the debtor conducts the administration
of his interests on a regular basis ? The notion of regular basis by no means implies
immutability, but, in any case, requires a degree of permanence and contituity or at least a
temporal stability.
In this context, let us recall that that the concept of establishment within the meaning of the Treaty
provisions on freedom of establishment involves the actual pursuit of an economic activity through a
fixed establishment on a stable and continuing basis (or for an indefinite period (see C-196/04
Cadbury Schweppes (2006), 53-54)

CONCLUSION: COMI - Quo Vadis?
We therefore notice a fundamental contradiction: despite the fact that EIR seeks to prevent forum
shopping (and ECJ has lent its strong support to this) it seems that it legitimizes (if not encourages) the
circumvention of national rules in the name of freedom of establishment, to the detriment of
creditors.
The proposed amendments to EIR are relatively minimal :
1. The inclusion of Recital 13 in Article 3(1)
2. Article 3(1) should include a presumption that in the case of an individual exercising an
independent business or professional activity, the centre of main interests shall be that
individual's principal place of business; in the case of any other individual, the centre of main
interests shall be presumed to be the place of the individual's habitual residence in the absence
of proof to the contrary.
3. Recitals could clarify that:
- when determining whether the COMI is ascertainable by third parties, special consideration must
be given to the creditors and their perception as to where a debtor conducts its business. This may
require, in the event of a shift of COMI, informing creditors of the new location from which the
debtor is carrying out his business, e.g. by drawing attention to the change of address in an invoice,
or making the new location public through other appropriate means.
- in order to determine the habitual residence, the courts dealing with insolvency proceedings
concerning individuals who are not exercising an independent business or professional activity
should make an overall assessment of the circumstances of the life of the individual at the time of
the request to open insolvency proceedings, taking account of all relevant factual elements, in
particular the duration and regularity of the individuals presence in the Member State concerned
and the conditions and reasons for that presence. The habitual residence thus determined should
reveal a close and stable connection to the Member State concerned, taking into account the
specific aims of this Regulation.