In a recent article entitled Bankruptcy tourism written by District Judge Melissa Clarke and published by the Law Society Gazette on the 12th October 2012 the issue of who the Court can allow to petition for their own bankruptcy was considered. This was in the context of so called forum shopping.
Generally the UK law in regard to bankruptcy is more favourable. The most notable advantage is that discharge from bankruptcy almost always occurs after one year. This is a very short time in comparison with other European countries. In Ireland, the minimum is 5 years, whilst in Germany, it is 6 years.
For many, becoming bankrupt allows them a fresh start to their lives clearing almost all types of debt. Once the Bankruptcy has been discharged the restrictions that are in place are generally lifted (subject to Bankruptcy Restriction Orders and Bankruptcy Restriction Undertakings).
Different rules apply to debtors who are normally resident in the European Union and debtors who are normally resident outside the European Union. The issue as to who can be made bankrupt in the UK, having previously lived in another European Union Country is controlled by Europe Council Regulation (EC) No 1346/2000 of 29 May 2000 on Insolvency Proceedings (2000) OJ L 160/1.
Those regulations specify that in the case of a company / legal person, the place of the registered office shall be presumed to be the centre of its main interests in the absence of proof to the contrary (Article 3 (1)).
For an individual, proceedings can only be issued in the UK if the debtor possesses an establishment (Centre of Main Interest – “COMI”) within the territory of another Member State.
While the concept of COMI is not defined in article 3 itself, paragraph 13 of the preamble to the regulation states that it ‘should correspond to the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties’.
The article considers the judgment in Sparkasse Hilden Ratingen Velbert v Benk & Anor [2012] EWHC 2432 (Ch) (29 August 2012). The Court in this case decided to annul a bankruptcy upon the grounds that the order ought not to have been made (Insolvency Act 1985, section 282(1)). The Court found that although Mr Benk claimed to have established his COMI in England as he was working there as a sports photographer, had rented a flat, owned and insured a car, had obtained a national insurance number and undertook normal day-to-day life there, his COMI was in Germany at the time of the presentation of the bankruptcy petition, and when the Order was made.
The reason for this decision was that he was habitually resident in Germany, though living temporarily in England. Mr Benk accepted that he did return to Germany after coming to England, though he said this was not very often. However, habitual residence does not require presence at any particular time, only habit. It was also found that Mr Benk had no professional domicile here, as the business was window-dressing, with no potential for any significant degree of permanence, and was not at the root of his insolvency.
At Benchmark Solicitors LLP we advise debtors in regard to the impact of bankruptcy upon them and assist people making themselves bankrupt. We offer a fixed fee service that includes Court fees.
Chris Tuckett, Solicitor – 1 March 2013