Vol 12 (2015) - Issue 5

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In the matter of Northsea Base Investment Limited & ors [2015] EWHC 121 (Ch); Birss J, 26 January 2015

Factual background
The eight applicants in administration (the Companies) were a group of Cypriot registered shipping companies. Six of the Companies were special purpose vehicles, each of them owning a single ship in the fleet (the SPVs). The other two applicants were holding companies, Baltic Tankers Holding Limited being 100% owner of the SPVs (Holdco 2) and Northsea Base Investment Limited being 100% owner of Holdco 2 (Holdco 1).
The Companies were all incorporated in Cyprus. They shared the same company registered office in Cyprus and had essentially the same form of Cypriot corporate documents.
The sole shareholder of Holdco 1 was Hamilton Corporation, incorporated in Nevis and owned in broadly equal shares by three Nevis family trusts, settled by three individuals (the Settlors). The Settlors were all directors of Marine Cross Services Limited (Marine Cross). Marine Cross is a shipping agent incorporated in the UK with its registered offices in London. The Companies were the only clients of Marine Cross.
In December 2014, Holdco 1 was heavily indebted and had already defaulted on its loan facilities, having received two notices of default from its lenders. Holdco 1 was also facing various debt claims in the region of USD 5,000,000. On 15 January 2015, the directors of each of the Companies appointed administrators via the out of court procedure set out in paragraph 22 of Schedule B1 of the Insolvency Act 1986 (the Act). Particular urgency arose from the fact that a ship was moving imminently into waters in and around the USA.
Following their appointment, the administrators sought a declaration from the court that the centre of main interests (COMI) of the Companies was England. The purpose of seeking a court order was to assist in the exporting of the administration to other jurisdictions. The matter was urgent because the Companies were operating vessels which were in international waters, and it was likely that applications in other jurisdictions may have been needed in the near future.
The hearing was held on 22 January 2015, a week after the administrators were appointed via the out of court procedure.

The judgment: factors relevant to the determination of COMI
Birss J was satisfied from the evidence that the matter was sufficiently urgent to justify the out of court appointment made by the directors, followed as it was by the urgent application to the court for a declaration relating to the COMI.
Birss J held that there was sufficient evidence, consisting of factors which were both objective and ascertainable by third parties, to rebut the registered office presumption and make a declaration that the COMI for each of the Companies was in England. The factors Birss J considered in his judgment were those set out below.

Points in support of finding the COMI in England
Operation and management
Marine Cross was responsible for the operation and management of the SPVs (and to a lesser extent due to limited operation activity, Holdco 1 and Holdco 2). The arrangement was set out in a service agreement, though Birss J found that more service, operations and management activities were undertaken by Marine Cross than were set out in the service agreement. Marine Cross contracted certain of the commercial operational and management to Scorpio Group.