We have recently been contacted by a number of Irish nationals wanting information and advice around relocating to the UK to take advantage of our different Bankruptcy regime.
The main difference in bankruptcy laws is that in Ireland, a debtor made Bankrupt remains so for twelve years whereas in the UK, there is an automatic discharge from Bankruptcy after one year.
Increasingly, Irish nationals, and indeed EU nationals from several other countries including Germany and Lithuania, are becoming aware that they can relocate to the UK to take advantage of our more relaxed Bankruptcy regime. Crucially, there is no bar on someone who has the intention to make themselves Bankrupt here from relocating to the UK.
That is not to say that the process of being declared bankrupt is easy in the UK; as with anyone seeking to be made bankrupt, it is a matter for the local Bankruptcy Court to decide whether a Bankruptcy Order should be made. That decision will be based on the facts presented before the Court on the date of the Bankruptcy hearing.
The factors a Court will deliberate on in deciding whether to make a Debtor Bankrupt are as follows:-
1. Is the Debtor insolvent?
The answer to this question will invariably be yes as this will be the reason for the Debtor’s relocation to the UK and presentation of a Bankruptcy Petition. Quite often in the case of Irish Bankruptcies the debt will relate to property shortfalls following the house price crash of recent years. Very often this will run into millions of Euros. If the Debtor wishes to enter into the Bankruptcy regime in Ireland or Germany they would be Bankrupt for 12 years. Quite clearly there is no possibility of the Debtor repaying a shortfall of millions of Euros.
2. The centre of main interest (COMI)
This is a more difficult question to be determined by the English Courts. Again, however, it will be decided upon by the facts presented at the time of the Bankruptcy hearing. The COMI effectively determines where a person is based. The more factors in favour of a COMI in the UK, the more likely a Bankruptcy Order is to be made. There is also a parallel requirement for the Debtor to cut ties with his home country.
The key factors the Court will consider in determining COMI are:-
‘¢ Evidence of residence:
A Tenancy Agreement, rent payments, utility bills, knowledge of the local area, supporting evidence from passing acquaintances, size of the accommodation, vehicle, insurance, pension, where post is delivered.
‘¢ Evidence of means:
This can include job, employment contract, source of income, use of bank accounts, Tax payments and National Insurance Number.
‘¢ Evidence of cutting ties:
De-registering from previous local authority, determining the frequency of trips back “home’, location of family, foreign bank accounts, foreign Tax and insurance.
With regard to the COMI, no one factor will be taken in isolation in deciding where the COMI is. The Court has a duty to consider all factors presented before it and to then make a decision.
If the Court is satisfied that the Debtor is insolvent and the COMI is in the jurisdiction of the Court in the UK, a Bankruptcy Order will be made.
As mentioned we have been contacted by a number of Irish, German Lithuanian, and other EU Nationals in relation to presenting a Petition in a UK Court. As such, we are well position to advise and assist in this technical process, including dealing with the practicalities and form filling associated with a Bankruptcy Petition in addition to providing advice on the technical legal aspects such as COMI.