## Facts

- Ascot Fund Ltd. was a Cayman Islands investment fund that invested substantially all assets in Ascot Partners L.P., a Delaware limited partnership, which in turn invested substantially all assets with Bernard L. Madoff Investment Securities LLC.
- After Madoff’s fraud was revealed in 2008, the fund’s investment chain suffered losses; later litigation and settlements produced assets for distribution that would flow to Ascot Fund and its shareholders.
- Ascot Fund entered a Cayman Islands liquidation supervised by the Cayman court, and a joint official liquidator filed a Chapter 15 petition in the Southern District of New York seeking recognition of the Cayman liquidation as a foreign main proceeding.
- An investor, hfc Limited, objected, arguing Ascot Fund’s center of main interests (COMI) was not in the Cayman Islands.
- The bankruptcy court held a one-day trial focused on COMI and recognition.

## Issues

1. Whether the Cayman Islands liquidation qualified for recognition as a “foreign main proceeding” under Chapter 15 because Ascot Fund’s COMI was in the Cayman Islands.
2. Whether the objecting investor rebutted the statutory presumption that the debtor’s registered office is its COMI.

## Decision

- The court overruled the investor’s objection and granted recognition of the Cayman liquidation as a foreign main proceeding.
- The court held that Ascot Fund’s COMI was in the Cayman Islands.
- The court applied the § 1516(c) presumption favoring the debtor’s registered office (Cayman Islands) and found the evidence insufficient to rebut it.
- The court rejected the argument that New York litigation and Madoff-related activity shifted COMI to New York, characterizing those activities as consequences of the fraud rather than indicators of the fund’s main administrative center.
- The court found no post-insolvency manipulation of COMI and treated Cayman as the appropriate forum for liquidation and distribution disputes under the fund’s governing documents.

## Legal Principles

- A “foreign main proceeding” requires a foreign proceeding pending where the debtor has its COMI.  
- Under 11 U.S.C. § 1516(c), absent contrary evidence, the debtor’s registered office is presumed to be its COMI.
- COMI is generally assessed as of the Chapter 15 petition date, with attention to prior operations to guard against post-insolvency COMI manipulation.
- In evaluating COMI, courts consider objective indicia such as where the debtor is organized and administered, governance and management location, and the reasonable expectations of creditors and investors reflected in governing and offering documents.
- Significant U.S. litigation or U.S.-centered investment activity, without more, does not necessarily displace COMI in the jurisdiction of incorporation and administration.

## Conclusion

The bankruptcy court recognized Ascot Fund’s Cayman liquidation as a Chapter 15 foreign main proceeding because the Cayman Islands was the fund’s COMI, the registered-office presumption was not rebutted, and New York litigation connected to the Madoff fraud did not relocate the fund’s primary center of administration or investor expectations.


In re Ascot Fund Ltd., 603 B.R. 271 (Bankr. S.D.N.Y. 2019)