Although one would expect that under the EU Insolvency Regulation (EIR) after some fifteen years the concept of center of main interest (COMI) would be rather be clear, time and again a COMI controversy pops up. In a Dutch case, decided by the Court of Appeal Arnhem-Leeuwarden 15 August 2016, ECLI:NL:GHARL:2016:6546, this Court and the District Court of Gelderland (location Zutphen) drew different conclusions from the same facts.
The first instance court dealt with a request of the debtor itself, Cloudiax B.V., incorporated in the Netherlands. Court Gelderland declined jurisdiction to open insolvency proceedings. Cloudiax subsequently appealed and asked the Court of Appeal to annul the decision and to have Cloudiax declared insolvent. The Court of Appeal applies, quite rightly, Article 3(1) EIR and the related judgments of the Court of Justice of the European Union (CJEU 15 December 2011, C-191/10, Rastelli v Hidoux qq) and CJEU 20 October 2011, C-396/09, Interedil). And because the registered office of Cloudiax, is Apeldoorn in the Netherlands, COMI is presumed to be Apeldoorn, concludes the Court. In result this is fine.
It is however noted that Article 3(1) EIR determines international jurisdiction and connects COMI to a Member State. Territorial jurisdiction in that Member State itself must be established by the national law of the Member State itself, therefore in the Netherlands via the Civil Procedural Code (Wetboek van Burgerlijke Rechtsvordering). The Court took two phases in one go. At issue, however, is whether this presumption may be rebutted. The Court of Appeal then embarks upon a trip of specifying and evaluating the basis of objective and verifiable factors, ascertainable by third parties to determine whether the real situation is different from that which the connecting factor (the registered office) is deemed to be, taking into account the individual circumstances of each case. It does so with a precision one sometimes sees in judgments from American bankruptcy courts.
The Appeal court sets forth:
- Cloudiax is a wholly owned subsidiary of the German company Variatec AG, which has an office in Emmerich (Germany) and which is the only statutory director of Cloudiax;
- Records of Cloudiax and Variatec are intermingled in the sense that they use the same (privatly developped) software program within which Cloudiax and Variatec are distinguished;
- Cloudiax charges its costs (particularly wages of staff and administrative costs) to Variatec, which then reimbursed these to Cloudiax;
- Statutory directors A and B each have approximately 5% of the shares of Variatec and A is also one of the statutory directors of Variatec. This seems to indicate (the Court is silent) that COMI is in Germany.
On the other hand, however, the Appeal Court notes over ten factors that generally confrims the presumption, such as:
- Cloudiax, founded on March 31, 2011, is registered in the Dutch commercial register;
- Variatec and Cloudiax have developed by using SAP software IT applications, which focuses Variatec on the German market and Cloudiax on the international market;
- A and B both are, since April 2011, authorized signatories of Cloudiax with a full proxy;
- Until the end of 2014 / early 2015 Cloudiax employed three Dutch persons, with compensation under Dutch law, being A, B and a third employee;
- Cloudiax is both for the payroll tax and social security contributions as the sales tax and corporation tax a subject to Dutch law and also has a RSIN number;
- Cloudiax has a Dutch phone number;
- Visiting and mailing address of Cloudiax is Apeldoorn (the address of director A);
- The actual control of the business of Cloudiax takes place from Apeldoorn, from a modest office;
- The business of Cloudiax is developed in the Netherlands, mainly by phone / mail / internet with foreign customers;
- The files of the underlying documents of the administration are located in Apeldoorn;
- Cloudiax contracted with Dutch companies (inter alia for telephony and administration);
- Cloudiax has Dutch creditors (Rabobank Apeldoorn, Vodafone, the Dutch Tax authorities and Flynth consultants and accountants);
- Cloudiax has just a little equity, but this is located in the Netherlands.
These factors and circumstances evaluated in the light of the COMI interpretation rule, the Appeal Court ruled that the presumption is not rebutted and ‘Apeldoorn’ is the COMI of Cloudiax. This implies that the Court under Article 3(1) EIR, read in conjunction with Article 2(1) of the Dutch Bankruptcy Act (which provides that the bankruptcy liquidation (faillissement) order is made by the court of the domicile of the debtor) has jurisdiction to open insolvency proceedings. It annulls the Court Gelderland judgment.