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UK Bankruptcy of Irish National Sean Quinn- an examination of the COMI issues

Whilst this is an old case now, it is worth taking a look at the issues the Court considered when hearing a bankruptcy annulment application against Sean Quinn and what criteria the Court thought relevant in terms of Sean Quinn’s Centre of Main Interests (COMI).

Background to the case

Irish businessman, Sean Quinn filed a bankruptcy petition in the High Court, Belfast on 10th November 2011. The Court duly made the Bankruptcy Order the following day but a creditor, Irish Bank Resolution Corporation Limited, made an application to Court to have the Bankruptcy Order annulled on the basis that Sean Quinn’s Centre of Main Interests (COMI) was not in Northern Ireland but was in the Republic of Ireland.

Quinn claimed that he was living in Northern Ireland and was a United Kingdom taxpayer and that he was therefore entitled to file his bankruptcy petition in Northern Ireland.

In considering the bankruptcy annulment application, the Court had to consider just where Mr Quinn’s Centre of Main Interests where prior to filing his petition.

Court’s decision on the debtor’s COMI

The Court considered whether Mr Quinn’s COMI was readily ascertainable by his creditors. The Court examined the arguments and evidence put forward by Mr Quinn, including a lease document on premises he claimed to rent and occupy on a regular basis in Northern Ireland, and concluded that Mr Quinn’s Centre of Main Interest was not in fact in Northern Ireland and that it was not easily ascertainable by his creditors that his Centre of Main Interests was in Northern Ireland. Therefore Mr Quinn could not claim to have jurisdiction in Northern Ireland.

The significance of this case regarding Centre of Main Interests

If the Bankruptcy Order made against Mr Quinn in Northern Ireland had stood, he would have been discharged from his bankruptcy after only 12 months. Having had it annulled and facing bankruptcy in the Republic of Ireland, he would be subjected to a more rigorous bankruptcy regime and be bankrupt for at least five years and possibly up to twelve.

A Centre of Main Interests determines where an individual or company may open insolvency proceedings. Unfortunately the Centre of Main Interests is not clearly defined in law and a number of cases have now been brought before the Courts to determine where an individual’s or corporate entity’s COMI is and hence where they are able to open their insolvency proceedings.

In this particular case it is interesting to note the steps the Court took to establish the facts and the evidence it was prepared to consider in determining Mr Quinn’s COMI. The Court said that the debtor’s creditors should be readily able to ascertain where his Centre of Main Interests where and Quinn’s occupation of the premises in Northern Ireland “was not sufficiently or reasonably ascertainable by third parties.”

The Judge went further and noted that the debtor had not put the phone number for the Northern Ireland business premises in the phone book or any trade directory and nor had he informed the bank and perhaps other creditors of the address.

This is now a key element in establishing your COMI. The Courts now generally expect you to have notified your creditors of your whereabouts and if you have moved your COMI to England or Wales you may be asked to evidence that you have notified your creditors accordingly.

If you have moved your COMI or are considering doing so, contact us now for an initial appraisal.

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