Online move ‘will boost bankruptcy tourism’

Personal bankruptcies have hit record levels, causing an overwhelming burden
on the judicial system.

The government has attempted to combat the problem by putting the entire
bankruptcy function online – but the move could have serious implications in the
fight to stop people moving to the UK merely to use advantageous insolvency
rules. The practice is known as bankruptcy tourism.

Chris Nutting, personal insolvency director at KPMG, said if bankruptcy
procedures move online rather than going to a court the number of bankruptcy
tourists in the UK could increase “significantly”.

A European debtor can register their centre of main interests (COMI) in the
UK and file their petition online, leaving insolvency practitioners to realise
the assets and track them down all over Europe.

Nutting’s concerns were echoed by Louise Brittain, partner in reorganisation
services at Deloitte, who believes there has to be some form of “sifting” of
information to ensure the system is not abused.

Brittain believes some information should be online such as document filing
but that an online-only procedure is a “step too far”.

At the time of going to press the Insolvency Service had not responded to
questions on whether it had plans for further checks when debtors file online
petitions for bankruptcy.


The judicial system is under pressure to meet the increased demand of debtors
filing for bankruptcy. However it cannot solve one problem by creating another.
The Insolvency Service may be able to meet demand, but at what cost? It has to
be very careful to ensure the UK does not earn the reputation as the debtor
paradise of the EU, as IPs spend all their time chasing small assets across the

Further reading:

tourism: excess baggage

Related reading