FOREIGN ISSUES

Can I make myself bankrupt in England if I live abroad?

Yes. If you are living in an EU member state, except Denmark, you must show to the Court that your centre of main interests is in the UK.  If you live in another part of the World you can present a bankruptcy petition in England if:-

(a)     you are personally present in England and Wales on the day you present your petition for bankruptcy to the Court, or

(b)     if you have lived or carried on business in England and Wales in the previous three years.

The country in which you live may not recognise the bankruptcy proceedings and creditors may still be able to take action against you in the country you live in. 

What is a centre of main interests?

Under the EC Regulation on Insolvency Proceedings 2000 if you live in a member state, except Denmark, you can open insolvency proceedings (make yourself bankrupt) only in the country where you have your "centre of main interests".

There is no definition of a centre of main interests but the Court will usually regard the country where you carry on a business or earn your living as your centre of main interests. The Court will also consider the place where you normally live, i.e. your country of habitual residence. If you are not employed or self-employed your centre of main interests will be the country you normally live in at the date of the petition. 

Where would I present my petition?

If you do not live in England or Wales and are able to make yourself bankrupt here, you must present your bankruptcy petition in the High Court. The bankruptcy petition must be presented either by yourself in person, or an agent acting on your behalf, e.g. a solicitor. If you appoint an agent to act on your behalf, you may need to grant them power of attorney – please contact the High Court for further details. Following the making of a bankruptcy order, you will need to provide information to the official receiver and complete a booklet and other documents, as well as possibly attending for an interview. Unfortunately, these documents cannot be completed before a bankruptcy order is made, and you cannot pre-book an appointment. 

However, if you explain your circumstances to the official receiver, e.g. you are only in the country for a limited period, he will try to fix an appointment for you as soon as possible. If you appoint an agent to act on your behalf under a power of attorney, that agent could be required to attend for interview at the official receiver’s office on your behalf. 

Do the bankruptcy restrictions apply when I go abroad?

We cannot offer guidance on the effects of an order made in a UK court in any foreign jurisdiction as the local law will apply and may place restrictions on you because you were made bankrupt in England and Wales.

For example, in the UK an undischarged bankrupt or a person subject to a bankruptcy restrictions order cannot act as the director of a limited company. The person could be a director of a foreign company if that company does not do any business in the UK. The laws of the country in which the company is registered may have its own restriction on someone who is an undischarged bankrupt or subject to a bankruptcy restrictions order in England and Wales acting as a director of a company.

If you are considering doing something abroad which you would be unable to do in the UK you should seek your own legal advice.

Does a bankruptcy order affect my assets abroad?

Yes – but how it affects them depends on where they are and whether you have had a business or a main residence in another state in the European Union. The EC Regulation on Insolvency Proceedings 2000 affects everyone who lives or has a business in a member state of the European Union (which includes the UK but excludes Denmark).

If your centre of main interests is in the UK, your trustee will be able to deal with all your assets throughout the EU, except if bankruptcy proceedings have also been started in another EU state where you have had a business (except Denmark). In that case, a trustee appointed in that other state will deal with the assets. Assets you have in Denmark or any countries outside the EU, for example the USA, will be part of your bankruptcy estate in the UK, although the trustee may encounter problems in selling them if he is not "recognised" in a foreign jurisdiction as having power to sell them. The trustee may require co-operation from you and  he may need to apply for a court order in the foreign country to deal with the asset.

If your centre of main interests is in another EU state, then any bankruptcy proceedings in the UK can deal only with assets in the UK.  These would be known as Territorial Proceedings, under the EC Regulation on Insolvency Proceedings 2000. 

Do debts owed to foreign creditors fall into my bankruptcy?

Yes – all of your creditors in the world, are able to claim in the bankruptcy being conducted in this country. There is a provision in insolvency law preventing creditors in the bankruptcy taking action against you in England and Wales whilst you are bankrupt. Foreign creditors will, in practical terms, not be stopped from taking debt-recovery action against you in their own country, as the English court cannot restrict their activities abroad. However, if a foreign creditor does start debt-recovery action abroad, you should explain the position and the foreign court might stop the action in view of your bankruptcy. If not, the foreign creditor may try to recover his debt from foreign assets which the trustee is unable to deal with.

Can a disqualified director or an undischarged bankrupt be a director of a foreign company?

You can be a director of a company registered outside England and Wales only if that company does not do any business within England and Wales. If you have any doubt, you should seek your own legal advice.

Does a foreign bankruptcy order have any effect in England and Wales?

It will depend on in which country the bankruptcy proceedings are brought. As regards assets, it will depend on whether the trustee of the foreign bankruptcy is ‘recognised’ in this country. If the bankruptcy proceedings are in another member state of the European Union (except for Denmark) where you have your centre of main interests, the trustee in those proceedings has the authority to deal with all the assets which you have within the EU (including the UK). As regards bankruptcy restrictions, it will depend on the foreign legislation governing the bankruptcy.