Package tours for bankrupts
Our shock story this week (click here) is that the recession has provided the opportunity to see package tours to become a bankrupt or ‘bankruptcy tourist’.
That’s putting it tritely but the UK is seeing an inflow of EU citizens, many of them German, to apply for bankruptcy here because the procedure is less demanding – 12 months until discharge – than in their home country, where it may take years.
The point is the criteria for being a UK bankrupt is not particularly testing, just a few months of residency and paying taxes here. German companies have sprung up to consult on ‘meeting’ those criteria.
That’s clearly not what UK bankruptcy laws were intended for and raises the question of whether some companies are abusing the system, even if they’re not doing anything illegal.
Moreover, imagine being a German bankrupt facing years before your record is clean and discovering your neighbour has merely crossed the channel to get out of trouble in just a year. You may not see that as an entirely equitable system.
Two things here. The Insolvency Service regards this as low down their list of priorities because of the small number of people involved. Since when was inequity a low priority?
Secondly, this may be one of those rare occasions when the European Union may have something useful to say on the subject of how inter state bankruptcy laws might work together more clearly.