Chapter 15 Recognition Denied Due To COMI Manipulation Scheme To Evade U.K. Judgment

More than a decade after the enactment of chapter 15 of the Bankruptcy Code, issues pertaining to recognition of a foreign debtor's bankruptcy or insolvency proceeding under chapter 15 have, in large part, shifted from the purely procedural inquiry (such as the foreign debtor's center of main interests, or "COMI") to more substantive challenges regarding the limits, if any, that chapter 15 places on U.S. bankruptcy courts. But as demonstrated by the recent ruling in In re Creative Finance Ltd. (In Liquidation), 2016 BL 8825 (Bankr. S.D.N.Y. Jan. 13, 2016), U.S. bankruptcy courts continue to closely scrutinize the manner and place of the foreign insolvency proceeding to ensure that it complies with the prerequisites for recognition under chapter 15. In Creative Finance, the U.S. Bankruptcy Court for the Southern District of New York denied recognition of a British Virgin Islands ("BVI") liquidation commenced as part of a scheme to avoid paying a U.K. judgment. The court