Courts crack down on insolvency tourists – Gateley
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Martin Barnes,
Gateley LLP, Leeds
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The Insolvency Service recently reported that the number of personal insolvencies fell to an eight-year low in 2013. One reason behind this could be that the courts are now “cracking down” on insolvency tourism which has been rife in previous years. Gateley law firm has a particular expertise in this area. Gateley recently acted for a German tax authority to annul the bankruptcy order of Jörn Brossmann, a German national who owed substantial sums in unpaid taxes and had presented his own petition in the High Court in London. Brossmann contended that his “centre of main interests” (COMI) had moved to the UK because he had left Germany and was seeking employment in the UK. However, at all material times, he was working and earning a substantial income in Germany. He had substantial liabilities, all in Germany; none in the UK. He gave as his address a flat in London, he opened UK bank accounts and secured a National Insurance number, but at no point did he work in the UK. COMI is defined as “the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties” and insolvency proceedings must be opened where an individual has his COMI. The determination of COMI involves a wide ranging enquiry and detailed analysis of all facts. Chief Registrar Baister found that as a matter of fact, Brossmann’s COMI had not moved to the UK and that he was an “insolvency tourist”. On balancing Brossmann’s connections with Germany and the UK, Registrar Baister found the majority of his interests to be in Germany with him having very few in the UK. He therefore annulled the bankruptcy order on the grounds that it ought not to have been made. It is thought that there are many more German insolvency tourists who availed themselves of the courts’ previously blasé approach to filing bankruptcy petitions. In this respect, and on the back of its success with the Brossmann case, Gateley has been instructed by other German tax authorities to annul the bankruptcy orders of other German nationals who are thought to be insolvency tourists. More articles in
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