612 B.R. 475
S.D.N.Y.2020Background
- Appellant Yuri Rozhkov is the foreign trustee (Foreign Representative) in a Russian Commercial Court insolvency for debtor Natalia Pirogova; he filed a Chapter 15 recognition petition in the SDNY in March 2018 seeking U.S. recognition of the Russian proceeding (initiated Oct. 2015).
- Pirogova is a Russian citizen and U.S. permanent resident since 2008 who testified she intends to remain in the U.S.; the Bankruptcy Court found no evidence she had recently been in or based in Russia at the petition date.
- Pirogova is the registered owner of a Moscow apartment and two Moscow cars, but the apartment was unfurnished, encumbered/seized, utilities largely unpaid, and the cars seized; she had limited family or social ties in Russia and little or no involvement in Russian business matters at the petition date.
- She faces longstanding Russian liabilities (including the 2007 Rizalti loan dispute) and a separate Russian company (Taurus LLC) in liquidation, but those matters predate the recognition petition and do not show ongoing operations.
- After a two-day evidentiary hearing, the Bankruptcy Court denied recognition both as a foreign main proceeding (Russia not COMI) and as a foreign nonmain proceeding (no establishment in Russia); the district court affirmed.
Issues
| Issue | Appellant's Argument | Pirogova's Argument | Held |
|---|---|---|---|
| Whether the Russian insolvency is a foreign main proceeding (COMI) | Russia is Pirogova’s COMI: habitual resident / past business and creditors’ expectations anchor COMI in Russia | Pirogova is based in the U.S., intends to remain there, lacks current Russian presence or contacts | Denied — presumption of habitual residence unsupported; totality of circumstances at petition date do not show Russia is COMI |
| Whether the Russian insolvency is a foreign nonmain proceeding (establishment) | Pirogova has an establishment in Russia: apartment, cars, Taurus LLC, unpaid utilities and the Russian proceeding evidence local operations | Those assets are encumbered/seized or abandoned; no place of operations or nontransitory economic activity as of petition date; the foreign proceeding itself cannot establish an establishment | Denied — no evidence of a place of operations or nontransitory economic activity; foreign bankruptcy alone insufficient to show establishment |
Key Cases Cited
- In re Fairfield Sentry Ltd., 714 F.3d 127 (2d Cir. 2013) (COMI is based on debtor’s activities at/around the Chapter 15 filing date; habitual-residence presumption applies absent contrary evidence)
- In re Ran, 607 F.3d 1017 (5th Cir. 2010) (foreign proceeding itself cannot automatically establish an "establishment")
- In re Kemsley, 489 B.R. 346 (Bankr. S.D.N.Y. 2013) (habitual residence comparable to domicile; permanence and expectation to remain inform COMI)
- In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., 389 B.R. 325 (S.D.N.Y. 2008) (existence of an "establishment" is a factual inquiry with no presumption)
- In re SPhinX, Ltd., 351 B.R. 103 (Bankr. S.D.N.Y. 2006) (various factors may be relevant to COMI; courts should avoid mechanical factor application)
- In re CBI Holding Co., 529 F.3d 432 (2d Cir. 2008) (standard of review for factual findings: clear error; legal conclusions reviewed de novo)