593 B.R. 402
Bankr. S.D.N.Y.2018Background
- Debtor Natalia Pirogova is a Russian citizen and U.S. permanent resident (Green Card); Russian insolvency proceedings were commenced by creditor VTB Bank and Yuri Rozhkov was appointed foreign representative.
- Rozhkov filed a Chapter 15 petition in SDNY seeking recognition of the Russian insolvency as a foreign main proceeding, or alternately as a foreign nonmain proceeding; court issued temporary provisional relief pending the hearing.
- Foreign Representative relied on ties to Russia (ownership of a Moscow apartment, family in Moscow, membership in a Moscow yacht club, Russian assets and creditors) to argue Russia was Pirogova’s COMI or that she had an establishment there.
- Pirogova countered she intended to and had established domicile in the U.S. (Green Card since 2008, U.S. ID, travel documents, Florida address) and disputed that she habitually resided or conducted ongoing economic activity in Russia at the petition date.
- Two-day evidentiary hearing produced testimony and documentary evidence; court found the Foreign Representative failed to prove by a preponderance that Russia was Pirogova’s COMI or that she had an ‘‘establishment’’ in Russia as of the petition date.
Issues
| Issue | Plaintiff's Argument (Foreign Rep.) | Defendant's Argument (Pirogova) | Held |
|---|---|---|---|
| Whether Russian proceeding is a foreign main proceeding (COMI) | Russia is Pirogova’s COMI: ties to Moscow, Russian assets and creditors, apartment ownership, family, yacht club membership | Pirogova’s habitual residence/domicile is the U.S.; Green Card and U.S. documents show intent to remain; no direct evidence she habitually resided in Russia at petition date | Denied — Foreign Rep. failed to prove by preponderance that COMI was Russia |
| Whether Russian proceeding is a foreign nonmain proceeding (establishment) | Single asset and associated indicia (utility bills, yacht club membership, company ownership, cars) show place of operations and nontransitory economic activity | Evidence is insufficient: apartment likely not occupied, assets/seizures undermine activity, no proof of ongoing local economic activity or minimal management | Denied — Foreign Rep. failed to prove an ‘‘establishment’’ in Russia |
| Whether past alleged fraud/flight affects COMI determination | Past conduct demonstrates ongoing links to Russia and explains assets/creditors there | Past misconduct is irrelevant to COMI as of petition date; COMI is determined at petition date unless manipulated | Court: Past conduct immaterial for COMI at petition date; no manipulation shown |
| Whether recognition would offend public policy or whether proceeding is collective (alternatives) | (Raised but secondary) | Pirogova objected on multiple procedural and public policy bases | Court did not reach these issues after denying recognition on COMI/establishment grounds |
Key Cases Cited
- In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., 389 B.R. 325 (S.D.N.Y. 2008) (COMI is sole criterion for foreign main proceeding)
- In re Ran, 607 F.3d 1017 (5th Cir. 2010) (habitual residence analysis for individuals; existence of past ties insufficient when debtor has established new domicile)
- In re Fairfield Sentry Ltd., 714 F.3d 127 (2d Cir. 2013) (COMI assessed at time of Chapter 15 petition; courts may guard against manipulation)
- In re Millennium Global Emerging Credit Master Fund Ltd., 474 B.R. 88 (S.D.N.Y. 2012) (burden on foreign representative; presumption of registered office/habitual residence can be rebutted)
- In re Kemsley, 489 B.R. 346 (Bankr. S.D.N.Y. 2013) (individual COMI/establishment analysis; ‘‘establishment’’ requires nontransitory place of operations)
- In re Creative Finance Ltd., 543 B.R. 498 (Bankr. S.D.N.Y. 2016) (recognition not automatic; operations/economic activity must show local marketplace effect)
- In re SPhinX, Ltd., 351 B.R. 103 (Bankr. S.D.N.Y. 2006) (statutory presumption of COMI but less weight when serious dispute exists)