Can I make myself bankrupt in England and Wales if I live abroad?
Yes, but if you are living in an EU member state, apart from Denmark, you must show the court that your centre of main interests is in the UK. See the next section to find out more about a centre of main interests.
If you live in any other part of the world you can present a bankruptcy petition in England and Wales 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 at any time in the three years before the day you present your petition.
The country in which you live may not recognise the bankruptcy proceedings and creditors there may still be able to take action against you.
What is a centre of main interests?
The EC Regulation on Insolvency Proceedings 2000 came into effect on 31 May 2002. It will affect you if you live in an EU Member State - apart from Denmark, which opted out of the Regulation. Under the Regulation 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 can present your petition in the High Court. Alternatively, if you lived or ran a business in England and Wales within the 6 months immediately before you present the petition, you can take it to a county court. If you ran a business here during this time, you can present it in the county court for the insolvency district where you carried on your business. If you did not run a business, you would present it in the county court for the insolvency district where you lived. If you lived or carried on business in the London insolvency district for the majority of the six months immediately before presenting the petition, you must present it in the High Court.
Who can present my petition?
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. You may wish to take legal advice on how to do this.
What happens after the bankruptcy order has been made?
Following the making of the bankruptcy order, you will need to provide information to the official receiver and complete a booklet and other documents. Unfortunately, these documents cannot be completed before a bankruptcy order is made, and you cannot pre-book an appointment.
You may be asked to attend for an interview or to take part in a telephone interview. It will depend on the circumstances of your bankruptcy. If you presented your petition in person, you can explain your circumstances to the official receiver, i.e. you are only in the country for a limited period. They will then 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, they could be asked to attend for interview 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. 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 that is registered in the UK. They could be a director of a foreign company if it does not do any business in the UK. The law of the country where the company is registered may have its own restrictions on someone acting as a director of a company if they are bankrupt or subject to a bankruptcy restrictions order in England and Wales. 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, will be part of your bankruptcy estate in the UK. The trustee may encounter problems in selling them if they are not "recognised" in a foreign jurisdiction as having power to sell them. The trustee may require co-operation from you and they 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 a 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 court in this country 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 their 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 where the bankruptcy proceedings are brought. With regard to 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 (EU) - 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). With regard to bankruptcy restrictions, it will depend on the foreign legislation governing the bankruptcy.
Further enquiries about foreign bankruptcies
If you still have unanswered questions about foreign bankruptcies, you can contact The Insolvency Enquiry Line on 0845 602 9848 – between 8.00am and 5.00pm Monday – Friday except bank holidays; or email: Insolvency.EnquiryLine@insolvency.gsi.gov.uk