East-West Logistics LLP v Melars Group Limited

In determining a corporate debtor’s centre of main interests, the court must begin with the registered-office presumption in the Recast EU Regulation on Insolvency Proceedings 2015/848, Article 3(1), unless the three-month exception applies. A “letterbox” office may make rebuttal easier but does not remove the presumption. The challenger must prove, through objective factors ascertainable by third parties, that the debtor regularly administers its interests elsewhere.

Ascertainability is assessed externally, but does not require general publicity or a hypothetical typical creditor. Facts actually known to a creditor may be relevant, with their significance going to weight. Facts unknown to creditors at the relevant time and discovered only later are excluded.

Melars Group Limited was incorporated in the British Virgin Islands and later moved its registered office to Malta. East-West Logistics LLP presented a winding-up petition in England based on a BVI judgment debt, alleging that the company’s centre of main interests was in the United Kingdom.

Deputy ICC Judge Baister made a winding-up order, finding that the company’s COMI was in England: [2020] EWHC 2090 (Ch). Miles J allowed the company’s appeal, holding that the registered-office presumption in favour of Malta had not been rebutted: [2021] EWHC 1523 (Ch). East-West appealed, challenging the weight given to the registered-office presumption and the approach to third-party ascertainability.

Disposition. The appeal was dismissed unanimously. Snowden LJ gave the leading judgment, with Lewison LJ and Sir Launcelot Henderson agreeing. The winding-up order therefore remained set aside.

1. Registered-office presumption. Under Article 3(1) of the Recast EU Regulation on Insolvency Proceedings 2015/848, the court must verify COMI for itself, but the inquiry does not begin from a blank sheet. Unless the three-month exception applies, it begins with the premise that COMI is at the registered office. A registered office operating only as a letterbox may make the presumption easier to rebut, but does not eliminate it. The relevant question in a suspected forum-shopping case is whether the move of COMI was real or illusory, not whether the registered-office move itself was real.
2. Rebuttal and ascertainability. The party seeking to displace the presumption must prove that the debtor actually administers its interests regularly elsewhere, by objective factors ascertainable by third parties. The court must assess the relevant circumstances comprehensively. Snowden LJ rejected an approach based on an invented hypothetical typical creditor or confined to matters in the public domain. A factor actually ascertained by a particular creditor in dealings with the debtor may be considered; its evidential significance goes to weight. However, matters unknown to all creditors at the relevant time and discovered only through later investigation cannot be relied upon. The court may require additional evidence and permit evidence of other creditors’ dealings.
3. Application. English-language and English-law contracts, London arbitration clauses, English lawyers engaged in litigation, the petitioner’s location and a Revolut account opened in London two years after the petition did not establish regular administration in England, individually or cumulatively. The company’s contracts were international commercial arrangements, the litigation-related factors reflected the proceedings brought against it, and the petitioner’s location was happenstance. The presumption in favour of Malta therefore stood.
4. Analytical caution. The distinction between administration of interests and commercial operations may help prevent undue weight being given to activities occurring in different jurisdictions. It is not a bright-line distinction or an additional test under Article 3(1).

• Court of Appeal (Civil Division) dismissed East-West’s appeal and upheld the result below: [2022] EWCA Civ 1419.
• High Court, Insolvency and Companies List Miles J allowed the company’s appeal against the winding-up order and held that its COMI was in Malta: [2021] EWHC 1523 (Ch).
• High Court, Insolvency and Companies List Deputy ICC Judge Baister made the winding-up order, finding that the company’s COMI was in England: [2020] EWHC 2090 (Ch).