The
Enterprise Act 2002 brought in many
useful reforms to streamline the
insolvency process. The idea behind
the major reform in bankruptcy
legislation was to reduce the stigma
associated with bankruptcy and
present a more straightforward
solution for insolvent individuals
who could be categorised as honest
bankrupts with the process making
life more difficult for dishonest
bankrupts. One of the unintended
side effects of streamlining the
procedure was to award the
bankruptcy jurisdiction in England
and Wales first prize in a beauty
contest between Europe’s varying
insolvency processes.
Currently in England and Wales the
automatic discharge period is 12
months and it is possible for a
bankrupt individual to be discharged
from bankruptcy within one month,
assuming that creditors do not
object. By contrast, a person made
bankrupt in Ireland will never be
discharged unless able to show after
12 years that creditors have been
paid in full. In Germany bankrupts
can remain undischarged for 9 years.
Reviewing every single one of the
Member States’ insolvency
jurisdictions would take more space
than this article allows, but
suffice it to say that nowhere in
Europe is the bankruptcy process
more lenient than in England and
Wales.
This has led to a number of
bankruptcy ‘tourists’ infiltrating
the system by transferring their
centre of main interests from their
home Member State to England or
Wales. Once they have relocated,
they can present their own petition
and take advantage of the relatively
light regulation of the bankruptcy
law in this jurisdiction. One high
profile example is Cork based
developer John Fleming whose Fleming
Group incurred around €1bn worth of
debt before Mr Fleming relocated to
England and petitioned for his own
bankruptcy in Southend County Court.
Taylors’ Business Recovery and
Insolvency Department has
significant recent experience of
dealing with cases involving foreign
national bankrupts. We appreciate
the intricacies of such cases and
the difficulties that can arise in
trying to locate and realise assets
situated in another Member State.
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