BusinessBusiness RecoveryOnline move ‘will boost bankruptcy tourism’

Online move ‘will boost bankruptcy tourism’

Moving bankruptcy functions online may make 'bankruptcy tourism' easier

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.

IN OUR VIEW

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
continent.

Further reading:

Bankruptcy
tourism: excess baggage

Related Articles

R3 calls for creditor 'breathing space' to help turn companies around

Accounting Standards R3 calls for creditor 'breathing space' to help turn companies around

2y Chris Warmoll, Writer
R3 cautiously welcomes advent of simpler bankruptcy regime

Business Recovery R3 cautiously welcomes advent of simpler bankruptcy regime

2y Chris Warmoll, Writer
Taking Stock: Spotting accounting flaws is child’s play

Audit Taking Stock: Spotting accounting flaws is child’s play

2y Taking Stock
Former Scots Tory party treasurer hit with bankruptcy restrictions

Business Recovery Former Scots Tory party treasurer hit with bankruptcy restrictions

2y Richard Crump, Writer
Administrations ‘flat-line’ as personal insolvencies hit low

Business Recovery Administrations ‘flat-line’ as personal insolvencies hit low

2y Richard Crump, Writer
Company and personal insolvencies sink to pre-recession lows

Business Recovery Company and personal insolvencies sink to pre-recession lows

3y Richard Crump, Writer
Bankruptcies hit lowest quarterly level in 15 years

Business Recovery Bankruptcies hit lowest quarterly level in 15 years

3y Richard Crump, Writer
PwC faces $1bn lawsuit over bad MF Global advice

Accounting Firms PwC faces $1bn lawsuit over bad MF Global advice

3y Richard Crump, Writer