In the matter of Astora Women's Health LLC

Recognition under the Cross-Border Insolvency Regulations 2006 is mandatory where the statutory requirements are established, subject to public policy and procedural safeguards. Chapter 11 proceedings may constitute a foreign proceeding even though management remains in possession, provided the proceedings are collective, insolvency-related, subject to foreign-court supervision or potential control, and directed to reorganisation or liquidation. A foreign court’s order may provide sufficient evidence to engage the statutory presumptions. The debtor’s registered office gives rise to a presumption that its centre of main interests is in that state, which requires evidence of contrary factors to displace. Recognition of foreign main proceedings carries the mandatory statutory stay.

Mark Thomas Bradley, Astora Women’s Health LLC’s chief financial officer, applied for recognition of Astora’s Chapter 11 proceedings in the United States Bankruptcy Court for the Southern District of New York. Astora had ceased operating and faced extensive product-liability claims, including claims in England, Wales and Scotland. Recognition was sought principally so that the British claims would be stayed and pursued within the United States proceedings.

The court considered whether the Chapter 11 proceedings were a foreign proceeding, whether Mr Bradley was a foreign representative, whether the evidential and procedural requirements were met, whether recognition would be manifestly contrary to public policy, and whether the proceedings were foreign main proceedings by reference to Astora’s centre of main interests.

1. Recognition granted. The court recognised Astora’s Chapter 11 proceedings as foreign main proceedings under Article 17 of Schedule 1 to the Cross-Border Insolvency Regulations 2006.
2. A foreign proceeding under Article 2(i) must be a collective judicial or administrative proceeding, conducted pursuant to insolvency law, in which the debtor’s assets and affairs are subject to foreign-court control or supervision, for reorganisation or liquidation. Chapter 11 satisfied those requirements. The proceedings addressed creditors collectively, were supervised by the United States Bankruptcy Court, and pursued a sale and realisation process for creditors’ benefit.
3. The fact that Chapter 11 is ordinarily a debtor-in-possession procedure did not prevent recognition. Court supervision may be potential rather than actual, and a debtor may retain control while satisfying the requirement of foreign-court supervision.
4. The United States order, together with the evidence, established that Mr Bradley was a foreign representative within Article 2(j). The Article 16 presumption was available, although the court also considered the underlying evidence directly.
5. Once the requirements of Article 17 were met, recognition was required, subject to Article 6, compliance with Article 15, and the classification of the proceedings as main or non-main. The applicant bore the burden of proof and owed a duty of full and frank disclosure, but no public policy ground justified refusal.
6. Astora’s registered office in Delaware engaged the presumption under Article 16(3) that its centre of main interests was in the United States. Evidence that Astora had no business, staff or management outside the United States, and that foreign litigation was managed from the United States, did not displace that presumption.
7. Recognition as foreign main proceedings triggered the mandatory stay under Article 20. The order was enforceable in Scotland under regulation 7 of the CBIR.