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.

Debt Solutions for Residents of Nottingham

Nottingham is one of the three main cities in the East Midlands alongside Leicester and Derby. The advice from Help With Debt advisors is free to anyone within Nottingham. If you have a debt issue that is worrying you, call a debt helpline today and take the first steps to becoming debt free.
Due to the credit crunch the usual methods of obtaining credit have ceased to be available and unemployment is on the rise nationally. The amount of debt that the average person in Nottingham has who is contacting us is in the region of £30,000. Via our solutions we can help clear that debt.
Help With Debt advisors expect tens of thousands of individuals will need assistance with debt in Nottingham over the next year as unemployment bites and credit supplies are squeezed still further.
Help With Debt advisors offer a full range of debt products and services including consultancy, advice and practical help whatever your situation. The debt advice services are free and prides itself on always providing best advice for clients seeking debt advice
• IVA – The IVA is well used alternative to bankruptcy which was brought in in 1986. The IVA allows a person to propose a settlement to those he owes money to. It is based upon what he can afford not what he is obliged to pay. The IVA once accepted binds all parties irrespective of whether they voted in favour of it or not and prevents any further action such as bankruptcy.. In most cases an IVA will last for 5 years. The IVA has had a bad press over recent years as too many companies sold them for profit and not because they were best advice. We only recommend and IVA where it suits you to have one. Debt Management – A good Debt Management Plan will again allow someone to repay their debt at a rate they can afford for either a short time or for longer, as the situation determines. If your debt problem is temporary and your situation is likely to improve then a debt management plan could be the best solution. It should be noted that while the debt management company will attempt to get the creditor to cease interest and charges, these may continue thereby increasing the debt level over a period of time. A Debt Management company will tell you that they can reduce your debt payments and they will deal with your creditors for you. Most debt management companies will charge you anything from 15% to 20% of the amount you pay to your creditors as a fee. This is pretty standard for the industry.
• Bankruptcy - Bankruptcy is an option for someone who is insolvent and maybe who has a lot of debt but no assets. The Bankruptcy proceeding has two aims; To free the individual from the pressures of creditors (people they owe money to) to enable him or her to make a fresh start. Bankruptcy only lasts for a year and you will be debt free the moment the order is made. If you have disposable income, you may need to make some payments to the Official Receiver for a maximum of 36 months. These are called income payment agreements. A Debt Help Advisor can advise on how best to minimise these and also help you fill out the large and complicated forms that are required.