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The following is ORDERED: Ow MIE

Janice D. Loyd

U.S. Bankruptcy Judge

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

In re: )

)

Petition of Andrew Paul Shimmin, as ) Case No. 22-10039-JDL

Liquidator of Comfort Jet Aviation, Ltd., ) Chapter 15

)

Debtor in a Foreign Proceeding. )

ORDER ON PETITION FOR RECOGNITION OF

FOREIGN PROCEEDING

I. Introduction

On August 30, 2022, there came on for evidentiary hearing before the Court the

issues framed by the following pleadings:

1. Chapter 15 Petition for Recognition of a Foreign Proceeding filed by Andrew Paul

Shimmin in his capacity as Liquidator (“Liquidator”) and Foreign Representative of Comfort

Jet Aviation Ltd. (“Comfort Jet’) [Docs. 1 and 2];

2. Objection of Dassault Falcon Jet - Wilmington Corp. (“DFJ”) to Petition for

Recognition of Foreign Proceeding [Doc. 28];

3. Objection by Kent Aviation, LLC (“Kent Aviation”) to Petition for Recognition of

Foreign Proceeding [Doc. 29];

4. Response to Objections to Petition for Recognition of Foreign Proceeding of

Andrew Paul Shimmin, as Liquidator of Comfort Jet Aviation, Ltd. [Doc. 41];

5. Supplemental Brief by Kent Aviation LLC in Support of Objection to Petition for

Recognition of Foreign Proceeding [Doc. 83]; and

6. Response to Supplemental Brief by Kent Aviation LLC in Support of Objection to

Petition for Recognition of Foreign Proceeding of Andrew Paul Shimmin, As Liquidator of

Comfort Jet Aviation, Ltd. [Doc. 85].

Pursuant to Fed. R. Bankr. P. 7052 and 9014, the following constitutes the Court’s

Findings of Fact and Conclusions of Law.

II. Jurisdiction

This Court has jurisdiction over this matter pursuant to 28 U.S.C. §1334(a), and

venue is proper pursuant to 28 U.S.C. § 1409. Reference to the Court of this matter is

proper pursuant to 20 U.S.C. § 157(a). This is a core proceeding pertaining to the

recognition of foreign proceedings and other matters under Chapter 15 of title 11 as

provided by 28 U.S.C. § 157(b)(2)(P).

III. Background

In the summer of 2018 Comfort Jet entered into certain agreements with

Aeromanagenent, Inc. (“Aeromanagement”) under which Aeromanagement was the listing

agent and broker for Comfort Jet’s sale of a 1987 Dassault Falcon 900 aircraft (the

“Aircraft”). In accordance with the agreements between Comfort Jet and Aeromanagement,

2

Aeromanagement was also responsible for matters pertaining to registration of the Aircraft

and to obtain the services of a company to conduct a C-Check1 inspection of the Aircraft

to make any repairs necessary. In September 2018, Comfort Jet, as Seller, and Kent

Aviation, as Buyer, entered into an Aircraft Purchase Agreement for the sale of the Aircraft

for the price of $1,500,000.

In accordance with the agreements between Comfort Jet and Aeromanagement,

Aeromanagement retained the services of DFJ to conduct the C-Check and make any

repairs to ensure that the Aircraft was airworthy. Over the next two years a dispute ensued

between Comfort Jet, Aeromanagement and DFJ as to the extent and performance of the

repairs. In June of 2020 the title company and escrow agent for the sale of the Aircraft

which had been dispensing payments for repairs and services agreed to by the parties and

was still holding $520,000 in escrow, filed an interpleader action in the District Court of

Oklahoma County, Oklahoma, seeking a judicial determination as to who was entitled to

the funds remaining in its possession. The action was thereafter removed to the United

States District Court for the Western District of Oklahoma where it remains pending.

Thereafter, Comfort Jet and DFJ filed answers and cross-claims against the other parties.

Kent filed cross-claims asserting, among other claims, claims of breach of contract and

fraud against Comfort Jet and DFJ. That court action remains pending with a demand for

jury trial.2

1 “C-Check” means the inspection, overhaul, repair, preservation and replacement of Parts

of the Aircraft, including preventive maintenance, identified as a full block C-Check under the

Airframe manufacturer's maintenance manuals and planning documents.

2 The case was set for jury trial in April 2022. That date was stricken by the District Court

pending the outcome of this Court’s hearing on the Recognition of Foreign Proceeding originally

3

Comfort Jet is a limited liability company organized and existing under the laws of

the Isle of Man (“IOM”).3 On October 1, 2021, pursuant to Section 226 of the Isle of Man

Companies Act, in Douglas, IOM, the Petitioner was appointed Liquidator for Comfort Jet

by an act of the Board of Directors of Comfort Jet and a vote of creditors.

On January 11, 2022, the Petitioner/Liquidator initiated this proceeding requesting

that the Court recognize the liquidation proceeding which is currently pending in the IOM

as a foreign main proceeding or, alternatively, a foreign nonmain proceeding, under

Chapter 15 of the Bankruptcy Code.

IV. Discussion

This Court’s recognition of a foreign insolvency proceeding under § 1517 of Chapter

set for hearing on March 24, 2022. Unlike the filing of cases under Chapters 7, 11, 12, 13 and

involuntary bankruptcies, the filing of a Petition under Chapter 15 does not impose the automatic

stay under section 362(a).

3 The IOM is nestled between England and Ireland in the Irish Sea. In area, it is slightly

more than three times the size of Washington D.C.. The IOM has a strong identity partly due to

its independence and the fact that the island is self-governing. It is an island nation and self-

governing British Crown Dependency–as are the Bailiwicks of Jersey and Guernsey in the English

Channel. The head of state is King Charles III, who holds the title of Lord of Man. It has the oldest

continuous parliament in the world, Tynwald, which dates back more than 1,000 years. Visitors can

tour the Tynwald building and visit Tynwald Hill, which is where Parliament meets in the open air

once a year.

The IOM economy is known for its status as a tax haven and offshore banking destination.

wikipedia.org/wiki/Isle_of_Man of Man (last visited 9/2/2022)

The IOM has its own insolvency laws and generally follows British common law precedent.

It has not adopted a model law consistent with the United Nations Commission on International

Trade Law (UNCITRAL). In the insolvency arena, the relevant model is known as the Model Law

on Cross- Border Insolvency (the “Model Law”). It was adopted by the General Assembly of the

United Nations in December 1997 and made available to member states. In the United States, the

Model Law serves the foundation for Chapter 15 which was enacted as part of the Bankruptcy

Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), to “encourage cooperation

between the United States and foreign countries with respect to transnational insolvency cases.”

H.R. Rep. No. 109-31(I) at 105 (2005).

4

15 of the Bankruptcy Code is dependent upon several statutory requirements.4 The foreign

representative has the ultimate burden of proof on the requirements for recognition. The

three requirements, set forth in § 1517, are as follows:

(a) Subject to section 1506, after notice and a hearing, an

order recognizing a foreign proceeding shall be entered if—

(1) such foreign proceeding for which recognition is

sought is a foreign main proceeding or foreign nonmain

proceeding within the meaning of section 1502;

(2) the foreign representative applying for recognition is

a person or body; and

(3) the petition meets the requirements of section 1515.

While DFJ, but not Kent, has challenged the Liquidator’s satisfaction of the existence of

a “foreign proceeding” under factor (1), the Court finds that the Liquidator has clearly met

the requirements of there being a “foreign proceeding” and that he is a “foreign

representative.”

First, § 101(23) defines a “foreign proceeding” as:

a collective judicial or administrative proceeding in a foreign

country, including an interim proceeding, under a law relating

to insolvency or adjustment of debt in which proceeding the

assets and affairs of the debtor are subject to control or

supervision by a foreign court, for the purpose of

reorganization or liquidation.

The IOM proceeding is a collective proceeding governed by the IOM Companies Act of

1931 through which Comfort Jet’s financial affairs will be wound up and its assets

distributed to creditors.

4 Unless otherwise noted, all statutory references are to sections of the United States

Bankruptcy Code, 11 U.S.C. § 101 et seq.

5

Next, there is no dispute that Petitioner, the Liquidator appointed under the laws of

the IOM, applying for recognition, is a person or body pursuant to subparagraph (2) of §

1517. Section 101(24) defines “foreign representative” as:

a person or body, including a person or body appointed on

interim basis, authorized in a foreign proceeding to administer

the reorganization or the liquidation of the debtor’s assets or

affairs or to act as a representative of such foreign proceeding

In turn, § 101(41) defines “person” to include an individual. The Liquidator, an individual,

is a “person,” and was appointed Liquidator by vote of creditors on October 1, 2021.

[Shimmin Tr. Ex. 000071-74; Doc. 2]. The Liquidator thus meets the requirements of

subsection (2) of § 1517.

To comply with subparagraph (3) of § 1517, the foreign representative must file a

petition that meets the requirements of § 1515, which are as follows:

(a) A foreign representative applies to the court for recognition

of a foreign proceeding in which the foreign representative has

been appointed by filing a petition for recognition.

(b) A petition for recognition shall be accompanied by—

(1) a certified copy of the decision commencing such

foreign proceeding and appointing the foreign

representative;

(2) a certificate from the foreign court affirming the

existence of such foreign proceeding and of the

appointment of the foreign representative; or

(3) in the absence of evidence referred to in paragraphs

(1) and (2), any other evidence acceptable to the court

of the existence of such foreign proceeding and of the

appointment of the foreign representative.

(c) A petition for recognition shall also be accompanied by a

statement identifying all foreign proceedings with respect to the

debtor that are known to the foreign representative.

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(d) The documents referred to in paragraphs (1) and (2) of

subsection (b) shall be translated into English. The court may

require a translation into English of additional documents.

There is no challenge to the contents of the Petition, and the Court is entitled to

presume that the documents submitted in support of the Petition are authentic. 11 U.S.C.

§ 1516(b). Thus, the Petition filed by Petitioner/ Liquidator herein meets the requirements

of § 1515.

The final statutory requirement for recognition pursuant to § 1517(a)(1) is that the

proceeding on the IOM be a “foreign main proceeding” or “foreign nonmain proceeding”

within the definitions of § 1502. This is the issue in dispute. Pursuant to § 1502(4), a

proceeding is defined as a “foreign main proceeding” if: (1) it is a “foreign proceeding;” and

(2) it is “pending in the country where the debtor has the center of its main interests.”

Section 1502(5) defines a “foreign nonmain proceeding” as “a foreign proceeding, other

than a foreign main proceeding, where the debtor has an establishment.” As discussed

above, there is no dispute that Comfort Jet’s proceeding pending in the IOM constitutes

a “foreign proceeding.” The dispute is whether Comfort Jet has its “center of its main

interests” on the island for this Court to recognize the proceeding as a “foreign main

proceeding” and/or whether it has an “establishment” on the island to constitute a “foreign

nonmain proceeding.” In short, the Court has three options: (i) recognize the proceeding

as a foreign main proceeding, (ii) recognize the proceeding as a foreign nonmain

proceeding, or (iii) refuse recognition.

A. Whether the Insolvency Proceedings on the Isle of Man are Entitled

to Recognition as a “Foreign Main Proceeding.”

Pursuant to Bankruptcy Code § 1502(4), the Court is directed to recognize the

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foreign proceeding “as a foreign main proceeding if it is pending in the country where the

debtor has its center of main interests (“COMI”). The location of the debtor's COMI is the

sole criterion for qualifying as a foreign main proceeding. See In re Bear Stearns

High-Grade Structured Credit Strategies Master Fund Ltd., 389 B.R. 325, 331-32 (S.D.

N.Y. 2008). The party seeking recognition as a foreign main proceeding must prove by a

preponderance of the evidence that the debtor’s COMI is in the jurisdiction where the

foreign main proceeding is pending. In re Gerova Financial Group Ltd., 482 B.R. 86, 90-91

(Bankr. S.D. N.Y. 2012); In re SPhinX, Ltd., 351 B.R. 103, 117 (Bankr. S.D. N.Y. 2006),

aff'd, 371 B.R. 10 (S.D. N.Y. 2007); In re Bear Stearns High-Grade Structured Credit

Strategies Master Fund, Ltd., 374 B.R. 122, 126 (Bankr. S.D. N.Y. 2007), aff'd, 389 B.R.

325 (S.D. N.Y. 2008).

Neither the Model Law nor Chapter 15 defines the term “COMI”; however § 1516(c)

provides that, “[i]n the absence of evidence to the contrary, the debtor's registered office

... is presumed to be the center of the debtor's main interests.” 11 U.S.C. § 1516(c); In re

Pirogova, 593 B.R. 402, 408 (Bankr. S.D. N.Y. 2018). There is no dispute that Comfort

Jet’s registered office is on the IOM, and thus there is a presumption that its COMI is there.

This presumption, however, can be overcome. The COMI presumption is rebuttable where

other factors suggest that the true COMI of a debtor lies elsewhere. See, e.g., Bear

Stearns, 389 B.R. at 335 (presumption that the place of the entity’s registered office is its

COMI “at no time relieves a petitioner of its burden or non-persuasion on the issue”); In re

Bear Stearns High–Grade Structured Credit Strategies Master Fund, Ltd., 374 B.R. 122,

129 (Bankr. S.D. N.Y. 2007), aff’d, 389 B.R. 325 (S.D. N.Y. 2008) (stating that “the COMI

presumption may be overcome particularly in the case of a ‘letterbox’ company not carrying

8

out any business” in the country where its registered office is located) (citing Bondi v. Bank

of America, N.A. (In re Eurofood IFSC Ltd.), 2006 E.C.R. I–3813, p. I8–I9, ¶ 32, 2006 WL

1142304 (E.C.J. May 2, 2006); In re ABC Learning Centres Limited, 445 B.R. 318, 333

(Bankr. D. Del. 2010), aff’d, 728 F.3d 301 (3rd Cir. 2013); In re Basis Yield Alpha Fund

(Master), 381 B.R. 37, 51-54 (Bankr. S.D. N.Y. 2008) (concluding that the absence of

objections to COMI were not binding; the court must make an independent determination

of COMI).

Courts consider several factors to determine whether the COMI presumption has

been overcome, including:

(1) the location of the debtor’s headquarters;

(2) the location of those who actually manage the debtor;

(3) the location of the debtor’s primary assets;

(4) the location of the majority of the debtor’s creditors or of a

majority of the creditors who would be affected by the case;

and /or

(5) the jurisdiction whose law would apply to most disputes.

In re SPhinX, Ltd., 351 B.R. at 117 (the “SPhinX Factors”).

These “[v]arious factors, singly or combined, could be relevant” to a COMI

determination. Id. Furthermore, the five SPhinX Factors should not be applied

“mechanically”; rather, “they should be viewed in light of Chapter 15's emphasis on

protecting the reasonable interests of parties in interest pursuant to fair procedures and the

maximization of the debtor’s value.” Id.; See also Morning Mist Holdings Ltd v. Krys (In re

Fairfield Sentry Ltd.), 714 F.3d 127, 137 (2nd Cir. 2013) (warning against mechanical

application by finding that “consideration of these specific factors is neither required nor

9

dispositive”). As noted in SPhinX, “because their money is ultimately at stake, one

generally should defer ... to the creditors’ acquiescence in or support of a proposed

COMI.”). 351 B.R. at 117. When a court considers the COMI factors, the protection of the

creditor’s interest is paramount. Id.; In re Serviços de Petróleo Constellation S.A., 613 B.R.

497, 508 (Bankr. S.D. N.Y. 2020) (“Courts in the Second Circuit also look to the

expectations of creditors with regard to the location of the debtor’s COMI.”); In re Chiang,

437 B.R. 397, 403 (Bankr. C.D. Cal. 2010), (explaining that “the location of the COMI is an

objective determination based on the viewpoint of third parties (usually creditors.”).

The SPhinX factors, in conjunction with the other considerations discussed above,

are addressed below:

1. The Location of the Debtor’s Headquarters. Comfort Jet’s registered

address is located on the IOM, and hence, under § 1516(c) the IOM is presumed to be its

COMI. However, Comfort Jet’s address is the same as IQEQ, a worldwide corporate

service company. This tends to indicate that the address is more in the nature of providing

a “letter box” rather than indicating the transaction of real business. Similarly, as further

proof of its pre-liquidation IOM COMI, the Liquidator introduced evidence that the Board

of Directors, Sharon Dunn and James Ramsey, resided or were based on the IOM.

[Shimmin Tr. Ex. 000071 and 000082]. On its face this militates in favor of a finding of

Comfort Jet’s COMI, but such is mitigated by evidence that the directors are employees

of IQEQ, whose corporate and governance services includes acting as a registered office

and providing directors. Shimmin testified that IQEQ was “the company service provider”

for Comfort Jet.

There was also testimony by Shimmin that the business model of Comfort Jet was

10

to own aircraft which it leased to its affiliate, Comfort Jet Services Ltd., located in Togo

(officially the Togolese Republic) in West Africa. The Court was handicapped in making

findings regarding the Debtor’s “headquarters” because Shimmin was not able to provide

any detail as to Comfort Jet’s operations or its actual management. Furthermore, the

Liquidator did not present for testimony a representative of Comfort Jet who could have

provided valuable information on the nature of Comfort Jet’s operations and the exact

nature of the business which was conducted on the IOM and elsewhere.5 There was

testimony by Mr. Shimmin that the actual principal of Comfort Jet and/or Comfort Jet

Services, was Herve Dossou. Kent was unsuccessful in obtaining his deposition or the

deposition of any designated representative of Comfort Jet pursuant to Fed. R. Civ. P.

30(b)(6). Comfort Jet’s and the Liquidator’s failure to produce a witness or any evidence

in their possession regarding the nature of its operations, specifically with regard to matters

pertaining to its COMI, entitles the Court to make the reasonable inference that the

testimony or evidence would have been adverse to Comfort Jet’s, and the Liquidator’s

5 In its objection, Kent attached several documents from websites with information about

Comfort Jet, Comfort Jet Services Ltd., Mr. Dossou and the “tax haven” nature of business

conducted on the IOM. Many of these documents were also included in Kent’s Trial Exhibit

Notebook submitted to the Court prior to trial. Unfortunately, at trial neither Kent nor DFJ offered

any exhibits into evidence for this Court’s consideration or asked the Court to take judicial notice

of the documents. Even to be admissible these documents from websites require authentication

under Fed. R. Evid. 901(a). See e.g., Phoenix Process Equipment Co. v. Capital Equipment &

Trading Corporation, 2022 WL 3094320, at *15 (W.D. Ky. 2022) (Generally,“[t]o authenticate

printouts from a website, the party proffering the evidence must produce some statement or

affidavit from someone with knowledge of the website ... for example a web master or someone

else with personal knowledge[.]” Furthermore, these documents are not official public records as

an exception to the rules of hearsay evidence which would permit the Court to take judicial notice

on its own pursuant to Fed. R. Evid. 201. Koenig v. USA Hockey, Inc., 2010 WL 4783042, at *2

(S.D. Ohio 2010) (“One court has gone so far as to describe information available on private

Internet websites as ‘not remotely akin to the type of facts which may be appropriately judicially

noticed.’”) (citing Ruiz v. Gap, Inc., 540 F.Supp.2d 1121, 1124 (N.D. Cal. 2008)); Gerritsen v.

Warner Bros. Entertainment Inc., 112 F.Supp.3d 1011, 1030 (C.D. Cal. 2015).

11

position.

On balance, the Court finds that the factor of location of Comfort Jet’s headquarters

on the IOM for purposes of establishing its COMI to be neutral.

2. The Location of Those Who Actually Manage the Debtor. Mr. Shimmin

testified and presented evidence that two of Comfort Jet’s Board of Directors were

residents of the IOM. It is also undisputed that they are both employees of IQEQ, a

worldwide company that provides corporate services, including directors. The evidence

presented showed that one of the Directors, Sharon Dunn, acted on behalf of “corporate

director Kleino Limited.” [Shimmin Tr. Ex. 000072]. There was no evidence as to the

nature, function or composition of Kleino Limited.

When asked by opposing counsel at trial whether “IQEQ was an entity that was

strictly hired to furnish the directors for Comfort Jet”, he replied, “ I believe so, yes.” There

was no evidence presented that these two individual Directors, employees of IQEQ,

actually, independently managed or exercised control of Comfort Jet. In the absence of

such evidence the Court finds that this factor weighs against a finding of the COMI on the

IOM.

3. The Location of the Debtor’s Primary Assets. Mr. Shimmin testified

that at the time of the commencement of the liquidation proceedings Comfort Jet’s bank

account with the approximate balance of $610,000 was located in Geneva, Switzerland;

approximately $516,000 claimed by Comfort Jet was on deposit in the Registry of the

United States District Court for the Western District of Oklahoma as part of the litigation

pending there between Comfort Jet, Kent, DFJ and others; the Dassault F900B Falcon Jet

sold by Comfort Jet to Kent (but which Shimmin indicated Comfort Jet may still claim some

12

interest) is located in Delaware, United States; and an account receivable valued at over

$6 million owed by an entity located in Cyprus. [Shimmin Tr. Ex. 000076]. Shimmin

testified, and evidence further indicated, that Comfort Jet held a 49% interest in Comfort

Jet Services Ltd., which was located in Togo. [Shimmin Tr. Ex. 000077]. There was no

evidence that any asset of Comfort Jet potentially available for making a distribution to

creditors was located on the IOM, prior to the Liquidator’s appointment. This finding

weighs heavily against Comfort Jet’s COMI being located on the IOM.

4. The Location of the Majority of the Debtors Creditors. The evidence

indicated that at the time the liquidation proceedings commenced on October 1, 2021,

seven creditors had filed claims. Multimillion dollar claims were filed by Petrostream

Limited and Eneray Limited. When asked at trial whether it was true that Petrostream was

not located on the Isle of Man, Shimmin replied, “correct.” When asked the same question

with regard to Eneray, Shimmin replied, “I’m not sure to confirm that.” The Debtor’s list of

creditors in its Statement of Affairs indicates the addresses for both Petrostream and

Eneray is the address of IQEQ on the IOM, the same address as Comfort Jet. The person

shown to be the contact for both Petrostream and Eneray is James Ramsey, the IQEQ

employee that is also one of the two Directors of Comfort Jet. [Shimmin Tr. Ex. 000080].

The list of creditors also shows Samuel Dossou and Herve Dossou, both located in

Monaco. One creditor is shown to be in France and another on the island of Malta. The

Oklahoma attorneys for the Liquidator in the proceedings before this Court and for Comfort

Jet in the Federal Court litigation are also creditors. Creditors Kent and DFJ are located

in Midland, Texas and Wilmington, Delaware, respectively. The last remaining creditor is

IQEQ located on the IOM. The location of the creditors factor weighs against the COMI

13

as being on the IOM.

5. The Jurisdiction Whose Law Would Apply to Most Disputes. There

was no evidence introduced pertaining to the law of the conflict of laws, including the

enforceability of choice of law provisions of a contract, of the IOM which might apply to the

contractual rights of creditors.6 The only choice of law provision applicable to the creditors

of which the Court is aware is in the Aircraft Purchase Agreement between Comfort Jet and

Kent which provides that the laws of the State of Oklahoma apply. There is thus no

evidence of the law applicable to “most” disputes. The Court finds that this factor for

determining COMI is neutral.

The Court therefore finds that the SPhinX Factors which are applicable weigh

against a finding that Comfort Jet’s COMI is on the IOM. The Court finds that Comfort Jet’s

proceeding on the IOM is not entitled to recognition as a foreign main proceeding in this

Court.

B. Whether the Insolvency Proceedings on the Isle of Man are Entitled

to Recognition as a Foreign Nonmain Proceeding.

An alternative form of recognition is recognition as a foreign nonmain proceeding.

Section 1517(b)(2) of the Bankruptcy Code provides that this Court may also recognize a

foreign proceeding if it is a “nonmain proceeding.” 11 U.S.C. §§ 1502(7) and 1517(a)(1).

6 Fed. R. Civ. P. 44.1 entitled Determining Foreign Law provides: A party who intends to

raise an issue about a foreign country's law must give notice by a pleading or other writing. In

determining foreign law, the court may consider any relevant material or source, including

testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence.

The court's determination must be treated as a ruling on a question of law. While the rule

governing determining foreign law allows the court to independently research the foreign law at

issue, the plain language of the rule does not impose a duty on the court to research foreign law

where the parties have provided little to no guidance to the court. Koshani v. Barton, 374 F.Supp.3d

695, 710 (E.D.Tenn.2019).

14

Under the Bankruptcy Code, a foreign “nonmain proceeding” means a proceeding, other

than a foreign main proceeding, where the debtor has “an establishment.” Id. at § 1502(5).

To be recognized as a nonmain proceeding, the foreign debtor must establish a degree of

stable connections with the jurisdiction to constitute a nontransitory “establishment.” 11

U.S.C. § 1502(2). As several commentators have explained:

Before Bear Stearns, it seems fair to say that many

practitioners believed—based on section 1515—that by

making these two showings, the statutory requirements for

commencing a valid and proper Chapter 15 proceeding had

been met. Bear Stearns revealed, however, that when a

foreign debtor commences a proceeding in a jurisdiction where

it has no real “presence”—i.e., no nontransitory business

activity—the foreign proceeding will not be recognized under

Chapter 15, either as a “main” or “nonmain” proceeding. The

“establishment” requirement for “nonmain” status requires, as

a prerequisite for any relief under Chapter 15, a base level of

connection between the foreign debtor and the foreign

jurisdiction that prevents a debtor from commencing a case in

a jurisdiction where it has nothing more than a mail-drop

presence.

William H. Schrag, William C. Heuer, and Robert E. Cortes, Cross-Border Insolvencies and

Chapter 15: Recent U.S. Case Law Determining Whether a Foreign Proceeding Is “Main”

or “Nonmain” or Neither, 17 J. Bankr. L. & Practice 5 Art. 4 (Aug. 2008).

The burden of proof is on the party seeking recognition of a foreign nonmain

proceeding to prove, by a preponderance of the evidence, that the debtor has an

“establishment” in the jurisdiction where the foreign insolvency proceeding is pending. See

In re Millennium Global Emerging Credit Master Fund Ltd., 474 B.R. 88, 91 (S.D. N.Y.

2012); see also In re Fairfield Sentry Ltd., 2011 WL 4357421, at *3 (S.D. N.Y. 2011). An

“establishment,” in turn, is defined as “any place of operations where the debtor carries out

a nontransitory economic activity.” 11 U.S.C. § 1502(2). While the Bankruptcy Code does

15

not define the phrases “place of operations” and “nontransitory economic activity,”

emerging case law provides guidance for the Court with respect to these terms. For

example, the bankruptcy court in In re Creative Finance Ltd., 543 B.R. 498, 520 (Bankr.

S.D. N.Y. 2016) held that “the terms ‘operations’ and ‘economic activity’ require a showing

of a local effect on the marketplace, more than mere incorporation and record-keeping and

more than just the maintenance of property.”; See also In re Millennium Global Emerging

Credit Master Fund Ltd., 458 B.R. 63, 85 (Bankr. S.D. N.Y. 2011), aff’d 474 B.R. 88 ( S.D.

N.Y. 2012).

Among the factors that contribute to identifying an establishment include: “the

economic impact of the debtor's operations on the market, the maintenance of a ‘minimum

level of organization’ for a period of time, and the objective appearance to creditors

whether the debtor has a local presence.” In re Modern Land (China) Co., Ltd., 641 B.R.

768, 784 (Bankr. S.D. N.Y. 2022) (citing Millennium Global I, 458 B.R. at 85. See In re

Creative Financial, Ltd., 543 B.R. 498, 520 (Bankr. S.D. N.Y. 2016) (citing In re Bear

Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., 374 B.R. 122, 131

(Bankr. S.D. N.Y. 2007)) (finding that an “establishment” requires a “showing of a local

effect on the marketplace, more than mere incorporation and record-keeping and more

than just the maintenance of property.”). “This is evidenced by engagement of ‘local

counsel and commitment of capital to local banks.’” Millennium Global I, 458 B.R. at 86–87.

See also Lavie v. Ran (In re Ran), 607 F.3d 1017, 1028 (5th Cir. 2010).

It may well be that Comfort Jet’s incorporation and related registration activities on

the IOM, in conjunction with other similarly situated business entities, could be shown to

have a significant market impact on the Isle. The court, however, cannot speculate on

16

what the evidence could show. Like much of the other issues relevant to this case, there

was a dearth of evidence produced by all parties, but the burden was on the Liquidator

seeking recognition to establish the requisite showing. This is particularly true where the

objectors produced enough evidence to rebut the presumption that registration itself was

sufficient to constitute Comfort Jet’s COMI or that Comfort Jet had an “establishment” on

the Isle. While Mr. Shimmen was a credible witness, he knew very little about the actual

management and operations of Comfort Jet. One would have anticipated that Comfort Jet

would have produced a more informed witness, perhaps Mr. Dossou, to advocate its

position that the company met either the SPhinX Factors to determine its COMI or that its

“establishment” was on the IOM. The Court finds that the failure of the Liquidator to

produce evidence that Comfort Jet has sufficiently engaged the local economy on the IOM

to constitute an “establishment” precludes the Debtor from a foreign nonmain classification.

C. Whether the Isle of Man Proceeding is Manifestly Contrary to the

Public Policy of the United States.

Bankruptcy Code § 1506 provides that the Court can refuse to recognize a foreign

proceeding “if the action would be manifestly contrary to the public policy of the United

States.” Courts agree that the public policy exception § 1506 is to be narrowly construed

and should be invoked only under exceptional circumstances concerning matters of

fundamental importance for the United States. In re ABC Learning Centres, Ltd., 728 F.3d

301, 309 (3rd Cir. 2013) (”The word ‘manifestly’ in international usage restricts the public

policy exception to the most fundamental policies of the United States.”) (quoting H.R. Rep.

No. 109-31(1), at 109 (2005) reprinted in U.S.C.C.A.N. 88, 172); In re Fairfield Sentry Ltd.,

714 F.3d 127, 139 (2nd Cir. 2013); In re Ran, 607 F.3d 1017,1021 (5th Cir. 2010); In re

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Black Gold S.A.R.L., 635 B.R. 517, 528 (9th Cir. BAP 2022). Some courts have held that

even the absence of certain procedural or constitutional rights will not itself be a bar under

§ 1506. See Ad Hoc Group of Vitro Noteholders v. Vitro S.A.B. de C.V. (In re Vitro S.A.B.

de C.V.), 701 F.3d 1031, 1069 (5th Cir. 2012) (citing In re RSM Richter Inc. v. Aguilar (In

re Ephedra Products Liability Litigation), 349 B.R. 333, 336 (S.D. N.Y. 2006) (“[F]ederal

courts have enforced against U.S. citizens foreign judgments rendered by foreign courts

for whom the very idea of a jury trial is foreign.”)). Likewise, a difference in foreign law and

U.S. law does not mean that recognition would be manifestly contrary to U.S. public policy.

Black Gold S.A.R.L., 635 B.R. at 528 (referencing the Guide7 at ¶ 30 (differences in

insolvency schemes do not, without more, justify a finding that enforcing one State's laws

would violate the public policy of another State); In re Manley Toys Ltd., 580 B.R. 632, 650

(Bankr. D. N.J. 2018) (citing In re Toft, 453 B.R. 186, 198 (Bankr. S.D. N.Y. 2011).

Kent contends that there are at least three aspects of the IOM proceedings that are

violative of United States public policy: (1) it appears that at least two of the largest, and

possibly more, creditors are insiders, and Kent argues that there is no mechanism for

equitable subordination of insider claims under IOM law; (2) there is an impermissible

conflict of interest under the Bankruptcy Code where the Oklahoma attorneys which are

creditors of Comfort Jet continue to represent both Debtor Comfort Jet and the Liquidator;

and (3) approximately $200,000 in fees have already been paid to the Liquidator and the

7 Chapter 15 incorporates into U.S. bankruptcy law the Model Law on Cross-Border

Insolvency (the “Model Law”), promulgated in 1997 by the United Nations Commission on

International Trade Law. Congress has specifically pointed to the Guide to Enactment of the

UNCITRAL Model Law (the “Guide”) as providing historical and interpretive guidance to the

meaning and purpose of the provisions in chapter 15. See H.R. Rep. No. 109-31(I) at 106 n.101,

as reprinted in 2005 U.S.C.C.A.N. 169 n. 101.

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Oklahoma attorneys without notice to the creditors.8 Are these differences between the

permissible under IOM insolvency law and impermissible Bankruptcy Code so “manifestly”

or “fundamentally” different as to violate United States public policy? The Court need not,

and does not, reach that determination. Having found that the foreign proceeding is not

entitled to recognition as either a main or nonmain proceeding, the Court need not

determine if there is an exception to recognition under § 1506.

D. Whether Kent and DFJ Waived Any Objection to Recognition of the

Foreign Proceeding by Filing Claims and Voting in Favor of Putting

Comfort Jet in Insolvency.

On October 1, 2021, in a meeting of creditors on the IOM, Kent and DFJ joined all

other creditors being present in voting in favor of Comfort Jet being placed into a Creditors

Voluntary Liquidation and appointing Shimmin as Liquidator. [Shimmin Tr. Ex. 000072-74].

There was no testimony or evidence presented at trial as to Kent and DFJ’s motives for

participating in the foreign proceeding. Presumably, it was to protect their interests in

sharing in any distributions which might be made in the liquidation on the IOM. The Court

cannot infer that Kent and/or DFJ’s participation in those proceedings waived their

substantive, statutory rights as creditors to participate in and challenge the ancillary, but

entirely separate, proceedings in the United States. For example, the filing of the

insolvency proceedings on the IOM did not implicate the automatic stay under § 362, and

the Court cannot infer that Kent and DFJ were waiving their right to pursue the litigation in

Oklahoma to determine the amount of their debt against Comfort Jet, including the

8 In addition to the public policy argument under § 1506, Kent also argues that these facts

run afoul of one of the stated purposes of Chapter 15 that cross-border insolvencies “protects the

interests of all creditors...” § 1501.

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assertion of any lien rights against the aircraft located in the United States, by filing claims

in the foreign proceeding. Furthermore, even if Kent and/or DFJ waived their right to

object, which the Court finds they did not, “recognition under § 1517 is not to be rubber

stamped by the courts” and the “Court must make an independent determination as to

whether the foreign proceeding meets the definitional requirements of sections 1502 and

1517 of the Bankruptcy Code.” Bear Stearns, 374 B.R. at 126.

Conclusion

For the reasons set forth above, the Court finds that insolvency proceedings on the

Isle of Man are not to be accorded recognition either as a main or nonmain proceeding

under Chapter 15 of the Bankruptcy Code, and the Petition for Recognition of a Foreign

Proceeding filed by Andrew Paul Shimmin in his capacity as Liquidator and Foreign

Representative of Comfort Jet Aviation, Ltd. [Docs. 1 and 2] is hereby Denied.

# # #

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