‘Bankruptcy tourists’ exploit UK’s lenient insolvency laws

Foreign nationals are travelling to the UK as ‘insolvency tourists’ seeking
to become bankrupt under English law because procedures in Britain last 12
months instead of up to nine years on the continent.

Experts have seen a surge in enquiries from Germany and France relating to
individuals wanting to use UK bankruptcy procedure.

In Germany, companies have even been launched to assist people coming to the
Insolvenz Agentur advertises on its website with the phrase: ‘Get rid of the
rest of your debts in England after just 12 months.’

It goes on to say: ‘We are supporting your way out of the debt trap,’ and:
‘After you have got rid of your debts you can decide if you then want to stay.’

Insolvenz assistance relates to helping German nationals demonstrate they
have been resident and paid taxes in the UK for at least six months so they can
take advantage of the much more lenient bankruptcy conditions.

Marcus Kray, a UK-based consultant at the German assisted bankruptcy
business, said: ‘I think it is right what we are doing.’

‘It is much easier and gives people a second chance at life and the ability
to get a better job.’

Mark Sands, national head of bankruptcy at Tenon, said: ‘I don’t think the
system was designed to allow Germans to come here and bankrupt themselves.’

Neil Smyth, a partner at European law firm Taylor Wessing, said: ‘If you are
a permanent resident or work here then fine. But, if you fly in and stay in a
place for a few weeks just to get a bankruptcy and have no intention of being a
resident, then that is an abuse of the system.’

The Insolvency Service is monitoring bankruptcy applications from abroad but
said it would not be taking any special action.

A spokesman said the service had so far recorded 59 applications where their
legitimacy was not clear because of where the bulk of assets were held. Two
thirds of those applications were rejected. ‘If figures are as miniscule as they
are, it won’t touch the radar,’ the spokesman added.

Kray said up to 85% of Germans decided to stay in the UK post discharge and
the average age of his clients is between 43 and 45 years old.

He said his client base had doubled over the last year to more than 100
doctors, dentists and other professions seeking a much shorter bankruptcy

Debts among his clients range from €80,000 (£68,000) to €4m.

Under current English laws, a foreign national generally has to prove their
centre of interest (COI) is in the UK for at least three months to succeed in

This means they need to have paid taxes, lived or worked in the UK, as well
as have a bank account and doctor.

For the German government to recognise the bankruptcy, a person needs to show
six months proof of COI.

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