Achieving COMI: Pre-Filing Considerations Based on Recent Case Law

As discussed in our first alert of this series, there has been a recent focus on companies principally domiciled in the U.S. utilizing foreign insolvency processes. For a foreign insolvency process to be recognized and enforced in the U.S., a U.S. court must consider the petitioning debtor’s “center of main interests,” or COMI. Accordingly, any company considering a foreign insolvency process must consider how a U.S. court will determine the company’s COMI and whether certain actions should be undertaken to shift COMI to effectively implement the proposed restructuring. This alert discusses the prevailing COMI factors, and highlights recent relevant court cases, to provide real-world examples for companies considering a “COMI shift” strategy. 

I. COMI Must Be Considered In Foreign Main Proceedings, Which Are More Expansive Than Foreign Nonmain Proceedings

As discussed in our prior alert, Chapter 15 of the U.S. Bankruptcy Code allows a debtor to obtain U.S. recognition of its foreign insolvency process and related judgments. This recognition gives formal effect, under U.S. law, to the underlying foreign proceedings and allows any corresponding orders to be enforced in the U.S. A U.S. court may recognize a foreign proceeding only if it finds that the foreign proceeding was a main or nonmain proceeding¹: A foreign main proceeding is a foreign proceeding where the debtor has its COMI outside of the U.S.²  Since enforcement of recognized main proceedings is largely automatic, it is the more preferred and common method of seeking recognition.³

II. Courts Have Emphasized Five COMI Factors—None Dispositive 

No single COMI factor—each of which is discussed below with an illustrative recent case—is dispositive and, although each circuit applies a slightly different test to determine a debtor’s COMI, factors are relatively consistent across jurisdictions. Notably, the COMI determination under Chapter 15 is made based on the facts as they exist at the time of filing for Chapter 15.⁴  This can lead to a U.S. court reaching a different conclusion from the one reached by a foreign court merely based on the timing of the COMI review. Importantly, the U.S. court is not bound by the foreign court’s COMI determination and may make its own independent COMI findings—as evidenced by certain of the cases discussed below. 

a. The Registered Office Presumption

The registered office presumption instructs the court that, without evidence to the contrary, a debtor’s registered office is presumed to be its COMI.⁵  In the February 2025 Mega Newco matter, a Mexican financial services company with U.S. notes decided to restructure its debts in a way that did not utilize either the U.S. or Mexican insolvency processes. To effect its restructuring, it created a UK subsidiary with a London office to assume all U.S. note obligations and restructure them under the UK’s scheme of arrangement.⁶  After successfully restructuring in the U.K., the company sought U.S. recognition. The court, despite voicing skepticism over this arrangement, found the COMI to be in the UK because, among other reasons, there was “no ‘contrary evidence’ in the record . . . that indicates that the company’s own COMI is located outside the United Kingdom.”⁷  

b. Location of Assets, Operations, and Management

A debtor’s management, or “nerve center,” tends to be an important factor in the COMI analysis. In the May 2025 Li-Cycle case, a Canadian lithium-ion battery recycling company began an insolvency process in Canada. Li-Cycle’s three U.S. subsidiaries followed suit and subsequently filed a Chapter 15 petition seeking provisional foreign main proceeding recognition of their Canadian proceedings.⁸ The U.S. Trustee filed the only objection to recognition, arguing that there was no Canadian COMI since there was no Canadian “nerve center” for these companies and the subsidiaries’ U.S. operations were only temporarily ceased.⁹ The U.S. court granted recognition of the Canadian proceedings as a foreign main proceeding over the U.S. Trustee’s objections, holding that the subsidiaries’ COMI was Canada. The court found that, on the date of the Chapter 15 petition, the subsidiaries effectively had no ongoing operations in the U.S. Instead, because the subsidiaries were managed by the chief restructuring officer in Ontario, Canada, and the board had ceded authority to the Canadian parent company, the “decision-making locus” had therefore moved to Canada.¹⁰ 

The location of a debtor’s assets also factors into the COMI analysis. In the June 2025 Giftcraft matter, the U.S.-based subsidiaries of a Canadian retail company sought recognition of their Canadian insolvency process. Despite the subsidiaries’ registered offices being located in the U.S., the court overruled the sole objection by the U.S. Trustee and found the subsidiaries’ COMI to be Canada.¹¹ The court noted that, when deciding COMI, “[p]re-filing restructuring efforts may shift a debtor’s COMI, particularly where the debtor is an entity with such limited operations that restructuring activity constitutes its ‘primary business activity’ prior to the filing of the chapter 15 petition.”¹² Pre-filing, all of the subsidiaries’ property and assets were placed into receivership with KPMG Canada. The court found this fact to be persuasive in reaching its conclusion that COMI was in Canada.¹³

The location of a debtor’s operations is also a key consideration for the court. This is highlighted in the Giftcraft case. Despite having a registered office in the U.S., Giftcraft U.S. had limited U.S.-based operations. In finding Canadian COMI, the court noted that all Giftcraft U.S. operations and business decisions had shifted to Canada, with no operations or inventory remaining in the United States, as of the time of the filing of the Chapter 15 petition. The court also noted that the exchange of assets into a Canadian receivership constituted pre-filing restructuring activities, which favored finding COMI in Canada.¹⁴

Similarly, in the March 2025 Intercement case, a Brazilian cement company’s Dutch special purpose vehicle (SPV) was found to have a Brazilian COMI. In that case, the Brazilian parent company incorporated, in the Netherlands, an SPV whose sole purpose was to repay New York law-governed notes issued by the SPV and manage relationships with noteholders. After the parent company and its subsidiaries commenced restructuring proceedings in Brazil, each entity sought Chapter 15 recognition of the Brazilian proceedings as foreign main proceedings. An ad hoc group of creditors objected to main proceeding recognition of the SPV, arguing that the registered office presumption should persuade the court that its COMI was the Netherlands. However, the U.S. court disagreed and determined that where a debtor is an SPV whose only operations are managing relationships with creditors and paying off obligations for its corporate parent, the debtor’s COMI can be determined by the location of the corporate nerve center.¹⁵ The court also found that, as of the petition date, the SPV’s “economic reality” was tied to Brazil since the SPV’s involvement in the Brazilian restructuring proceedings was the only chance for this SPV to pay its debts.¹⁶ Together, this was sufficient to rebut the registered office presumption and find the debtor’s COMI was Brazil. 

c. Expectations of Creditors

Chapter 15 courts also take into consideration the rights and expectations of creditors when deciding COMI. In Li-Cycle, when approving the Canadian COMI, the court noted that failing to recognize a Canadian COMI would greatly harm the debtors and creditors.¹⁷  In that instance, the debtors’ largest creditor conditioned additional debtor-in-possession financing on their ability to achieve main proceeding recognition. The court noted that this additional financing would maximize the creditors’ recovery.¹⁸

Courts look to creditor objections in determining this factor. In Mega Newco, the court explained that where “COMI manipulation is a matter of concern because of the risk that creditors’ rights and expectations might be thwarted, then one of the main factors . . . to consider, in deciding whether such a manipulation has occurred, is whether the affected creditors have asserted any objection.”¹⁹ There, in recognizing the foreign judgment, the court found that no creditors objected and that “[i]ronically, the only thing that would thwart creditor expectations in the case . . . would be if [the court] were to decline to enforce the English Court Order.”²⁰ Instead, the creditors’ silence signaled to the court that they acquiesced and that their expectations were not being frustrated.²¹

Similarly, and as described in our prior alert, in the November 2025 Fossil matter, an American fashion company pursued a UK Restructuring Plan to restructure a class of notes. Prior to the Chapter 15 recognition proceeding, the lone objecting creditor had its notes purchased and withdrew its objection, allowing the debtors to achieve unanimous consent for the plan among its creditors. The court then recognized England as the debtor’s COMI based on the pre-filing activities. The lack of any creditor objection likely was a crucial factor in the U.S. court’s decision to recognize this relatively novel case.²²

d. Location of Creditors

Courts have also recently considered the location of creditors, even if they have not found the factor to be dispositive for determining the COMI. In Giftcraft, when approving the Canadian COMI, the court noted that one of the factors behind its decision was that the major creditors were located in Canada on the petition date.²³ However, the courts have weighed this factor against the expectations of creditors; when creditors benefit or acquiesce, the courts do appear more persuaded by their perspective than their physical location. In Li-Cycle, the court noted that, when weighing the lack of objections from involved creditors against the large number of creditors in the U.S., a Canadian COMI was still proper. 

e. Other Factors Courts Consider

Finally, courts have discretion to consider additional factors in the interest of justice. “[C]ourts may undertake a ‘holistic analysis’ to consider whether a debtor has manipulated COMI in bad faith prior to the filing of a Chapter 15 petition in the debtor’s preferred locale. . . .” including certain indicators such as “insider exploitation, untoward manipulation, [and] overt thwarting of third party expectations.”²⁴ However, courts also have distinguished between “good” and “bad” forum shopping in these instances. In Mega Newco, the court was skeptical of the debtor’s two-step plan to create an English subsidiary to restructure certain notes under an English law restructuring plan and then use Chapter 15 to enforce this arrangement in the U.S. The court stated that this type of COMI-maneuvering could threaten to make the prerequisites of Chapter 15 meaningless or be used to thwart creditors’ rights. However, the court nevertheless granted recognition of the English restructuring plan as a foreign main proceeding, finding that “[I]n light of the support of all of the affected parties and their overwhelming consent to the . . . [scheme] . . . and the other factors that I have cited, I see no cause in this particular case to look past the form of the transactions or to pursue theoretical issues that no affected party wishes to pursue.”²⁵ This “positive” forum shopping can be characterized as one where all parties appear to benefit and Chapter 15 is being used for “laudable objectives.”²⁶

III. Practical Takeaways From Recent Case Law

Recent case law suggests that, under the right conditions, Chapter 15 courts will grant recognition of a foreign restructuring scheme even where COMI may have shifted in the period leading up to the filing. Two considerations appear to be particularly influential in a court’s COMI determination. 

First, the pre-filing activities need to align with the traditional COMI factors. As has long been the case, COMI is determined by the facts at the time of the Chapter 15 petition. By planning ahead to ensure that the debtor’s registered office, assets, and management match the desired COMI, a stronger case can be built ahead of the petition for that COMI.

Second, the expectations of creditors play an important role. Courts have heavily scrutinized this factor in recent cases when it is apparent that the COMI has been strategically relocated for restructuring purposes. The courts appear to place an especially heavy emphasis on whether these schemes are beneficial to the affected creditors. Whether a scheme will enhance the results for these creditors and they therefore consent appears to be a key for the court in making a COMI determination. Additionally, dealing with objecting creditors prior to the petition date is advisable, as total approval or acquiescence by the creditors appears to be a key method for the courts to gauge creditor expectations. It remains to be seen whether U.S. courts will recognize a shifted COMI over heavy creditor objection—perhaps this will be the next frontier of cross-border restructuring and the topic for a future article in this series.

 

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¹ 11 U.S.C. § 1517(a)(1).

² 11 U.S.C. § 1502(4).

³ This differs from a nonmain proceeding, which is any other foreign proceeding where the debtor has an “establishment.” 11 U.S.C. § 1502(5). The enforcement of a nonmain proceeding is entirely within the court’s discretion. 11 U.S.C. § 1520. Additionally, nonmain recognition is not an automatic fallback when a proceeding was not found to be in a debtor’s COMI. In re Mega Newco Ltd., No 24-12031 (MEW), 2025 WL 601463 *2, (Bankr. S.D.N.Y. February 24, 2025).

⁴ See In re InterCement Brasil S.A., 668 B.R. 802, 823 (Bankr. S.D.N.Y. 2025). Note, however, that a court can take into account pre-existing arrangements between a debtor and its creditors. Id. at 819.

⁵ 11 U.S.C § 1516(c). However, this is a rebuttable presumption, so enough evidence to the contrary can persuade the court to find COMI elsewhere. See, e.g., In re Giftcraft Ltd., No. 25-11030 (MG), 2025 WL 1583480, at *7 (Bankr. S.D.N.Y. June 4, 2025) (finding COMI in Canada despite some debtors having their registered offices in the U.S.).

⁶ Mega Newco, 2025 WL 601463.

⁷ Id. at *3.

⁸ In re Li-Cycle Holdings Corp., et al., No. 25-10991 (PB) (Bankr. S.D.N.Y. May 27, 2025) (oral ruling).

⁹ Id.

¹⁰ Id.

¹¹ Giftcraft, 2025 WL 1583480.

¹² Id. at *7 (internal citations omitted).

¹³ Id. at *9.

¹⁴ Id.

¹⁵ InterCement, 668 B.R. at 822.

¹⁶ Id.

¹⁷ Li-Cycle, No. 25-10991 (PB) (oral ruling).

¹⁸ Id.

¹⁹ Mega Newco, 2025 WL 601463 *4.

²⁰ Id.

²¹ Id.

²² See In re Xinyuan Real Est. Co. Ltd., No. 25-10745 (PB), 2026 WL 592250, at *11 (Bankr. S.D.N.Y. Mar. 3, 2026) (noting that precedent would support finding the debtor’s COMI in its preferred jurisdiction if the debtor has both overwhelming creditor support from affected creditors and no objections to recognition).

²³ Giftcraft, 2025 WL 1583480, at *9 (Bankr. S.D.N.Y. June 4, 2025).

²⁴Id., at *8 (internal citations omitted).

²⁵ Mega Newco 2025 WL 601463, at *4.¹11 U.S.C. § 1517(a)(1).

²⁶ Id., see also Xinyuan 2026 WL 592250, at *11