Questions on the “centre of main interest” in relation to bankruptcy

I am getting more and more questions on how the definition of COMI, or centre of main interest works. With increasing numbers of Irish citizens looking to explore coming across to the UK to live and work and maybe declare bankruptcy it will be important to understand this concept.

The Insolvency Services website on its bankruptcy FAQ's page includes the following statement. "Under the EC Regulation on Insolvency Proceedings if you live in a member state, except Denmark, you can only open insolvency proceedings (make yourself bankrupt) 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 interest. 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.

So from the above it is clearly the view that the starting point will be the territory where you normally live. So in order to establish a COMI, you must first move to the UK. Principally here we mean Northern Ireland, England or Wales, as Scotland has its own bankruptcy regime.

Secondly it is where you earn your living. For the vast majority of people that will also be where they live. I would always advise people to live and work in the same jurisdiction, it simply avoids any questions about where the true COMI lies.

Thirdly it actually doesn't seem to matter to the Official Receiver if you are working or not. If you are not employed then they will take your COMI as the place where you habitually live. So according to the Official Receiver you can come over to the UK, live here and not work and still go bankrupt. This has been borne out by clients I have taken through the process.

You must bear in mind that if you intend to re-locate to the UK and establish your centre of main interests here, to take advantage of personal insolvency legislation, you should be aware that the official receiver will investigate the truth of your move. If your re-location is only temporary or false, for example if you continue to work in the country where you formerly lived, the Court can rescind (remove) the bankruptcy order. Again, this is taken from the Insolvency Services website.

Finally there is case law helpful to those looking to establish their COMI here. The Court of Appeal case of Shierson v Vlieland Boddy established that the regulation permits the migration of an individual's COMI, even for self-serving purposes. This conclusion respects the fundamental right of free movement of persons which is enshrined in Article 45 Treaty on the Functioning of the European Union (ex Article 39 EC).

In the UK case of Official Receiver v Eichler, it was suggested, albeit obiter, that even a temporary move to another member state is sufficient to ground insolvency proceedings in that member state on the basis that there is no authority stating that the debtor must reside for a minimum period of time in a state before the debtor's COMI is considered to have moved.