International Issues
Cases
In the matter of Eurofood IFSC Limited
[2004] IEHC 607
Kelly J.
“Location of the Centre of Main Interests
One begins with the presumption that the centre of main interests is the place of the registered office of the company in the absence of proof to the contrary. The registered office of Eurofood was, and is Ireland.
Recital 13 to the Directive provides that the centre of main interests should correspond to the place where the debtor conducts the administration of its interests on a regular basis and is therefore ascertainable by third parties. Moss, Fletcher and Issacs in their book entitled ‘EC Regulation on Insolvency Proceedings’ (Oxford University Press 2002) say of this recital that it indicates that the centre of main interests
“Is intended to provide a test in which the attributes of transparency and objective ascertainability are dominant factors. This should enable parties who have dealings with the debtor to found their expectations on the reasonable conclusions to be drawn from systematic conduct and arrangements for which the debtor is responsible. In principle therefore it ought not to be possible for a debtor to gain advantages, at creditors expense, from having resorted to evasive or confusing techniques of organising its business or personal affairs, in a way calculated to conceal the true location from which interests are systematically administered”.
The concept of the centre of main interests was also discussed in the Virgos Schmidt report in the following terms:-
“The concept of ‘centre of main interests’ must be interpreted as the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties. The rationale of this rule is not difficult to explain. Insolvency is a foreseeable risk. It is therefore important that international jurisdiction (which, as we will see, entails the application of the insolvency laws of that contracting State), be based on a place known to the debtors potential creditors. This enables the legal risks which would have to be assumed in the case of insolvency to be calculated. By using the term ‘interests’, the intention was to encompass not only commercial, industrial or professional activities, but also general economic activities, so as to include the activities of private individuals (e.g. consumers). The expression ‘main’ serves as a criterion for the cases where these interests include activities of different types which are run from different centres. In principle, the centre of main interests will in the case of professionals to be their place of their professional domicile and for natural persons in general, the place of their habitual residence. Where companies and legal persons are concerned, the convention presumes, unless proved to the contrary, that the debtor’s centre of main interests is the place of his registered office. This place normally corresponds to the debtor’s head office”.
The Regulation also recognises the difference between the centre of main interests and what it describes as an establishment (any place of operations where the debtor carries out a non-transitory economic activity with human means and goods). Secondary proceedings may be commenced in an establishment.
In re Brac Rent a Car International Inc. [2003] 2 All E.R 201, Lloyd J. had to deal with a company which was incorporated under the laws of Delaware in the United States of America but had a petition presented against it in England for the appointment of an administrator. The evidence disclosed that although the company’s registered office was in the United States, it had not traded from that address and indeed had never traded anywhere within the United States. Its operations were conducted almost exclusively in the United Kingdom where all its employees were based save for a small number working from a Swiss branch office. Its contracts were governed by English law. That judge concluded that the company’s centre of main interests was in the United Kingdom but in the course of his judgment concluded that a company’s centre of main interests is not necessarily the same as its “seat” for the purpose of determining domicile for what was formerly the Brussels Convention and what is now Brussels 1 Regulation, namely the place where its central management and control actually abide. He also noted that whilst a company can have more than one seat it can have only one centre of main interests.
Another English decision of relevance is that of His Hon. Judge McGonigal (sitting as a judge of the High Court) in the case of re Daisytek ISA Ltd. There administration orders were made in respect of an English holding company as well as its German and French subsidiaries with the court holding that all had their centre of main interests in England. The evidence in the case was that the majority of the administration of the German companies was conducted from England. The court found with regard to the German companies that their financial function was operated from England and that the financial information complied with the United Kingdom accounting principles. The German companies could not purchase any goods in excess of €5,000 without the sanction of the parent company and all information technology and support was run from England. Its contracts were negotiated from England. Its corporate identity and branding was run by the parent company and the day to day business strategy was set by the English parent. Similar considerations applied to the French company. The court held that the centre of main interests was in the United Kingdom. In so concluding the judge cited with approval from the decision in Geveran Trading Company Ltd. v. Skjevesland [2003] BCC 209 where the registrar in that case commented
“It is the need for third parties to ascertain the centre of a debtors main interests that is important, because, if there are to be insolvency proceedings, the creditors need to know where to go to contact the debtor”.
Judge McGonigal went on to comment that the most important third parties in an insolvency are the creditors.
The Eurofood creditors were not heard by the Parma Court. The evidence from them as to their understanding and perception as sworn to by Ms. Jenkins is very strong. Their clear perception was that they were dealing with investments issued by a company that was located in Ireland and was subject to Irish fiscal and regulatory provisions. There is no evidence whatsoever that they considered the company was run out of Italy. That, coupled with all of the other findings which I have made concerning Eurofood (under the heading ‘Eurofood at p 1 and following) earlier in this judgment is determinative of the issue. I am satisfied that not merely were main insolvency proceedings opened in this jurisdiction on the 27th January, 2004 but that the centre of main interests of the company was, and is in Ireland. Furthermore although not expressly stated in the court order of 27th January 2004, the whole basis for the making of that order was that the court was satisfied that the centre of main interests was in this jurisdiction. Indeed the whole thrust of the application and the object of it was to prevent a perceived attempt on the part of Signor Bondi to take steps to remove the centre of main interests from Ireland.”