However, in practice, it may be possible to change a person’s Residence and Domicile from, say, Ireland to that of, say the United Kingdom, where the bankruptcy regime is much more favourable to the bankrupt debtor in terms of the length of the bankruptcy. A “simple” Irish bankruptcy will last at least 3 years. A “simple” UK bankruptcy could last just one year, with very straightforward cases just lasting 6/7 months. An Income Payments Order could be made in the UK for three years, whilst the period in Ireland is 5 years.A faster bankruptcy process may have significant benefits for a bankrupt in areas such as pensions and expected inheritances.
Some commentators have suggested that the Belfast High Court’s decsion in respect of Sean Quinn’s decsion to self adjudicate for bankruptcy, and which was challanged by Irish Bank Resolution Corporation Limited, makes it more difficult for Irish people to avail of UK bankruptcy procedures. However, the High Court’s decision to annul the Bankruptcy Order was based on the specific facts of the case. If anything, the High Court decision confirms that if the proper procedural steps are taken by a bankrupt in the UK, that it would be very difficult for an Irish creditor to challange it. We are experts at advising clients on how to comprehensively change their COMI to the UK.
In the United Kingdom, the position of your pension may depend on:
- the date you were made bankrupt;
- whether you have been discharged from bankruptcy or not;
- whether your pension is an occupational pension or a personal pension.
The United Kingdom Welfare Reform and Pensions Act 1999 protects all pensions arising from tax-approved pension schemes against being part of a bankrupt’s estate, for anyone made bankrupt after 29 May 2000. So, the Trustee in Bankruptcy cannot usually control UK approved pension schemes to pay off creditors. However, there is uncertainty as to whether certain Irish pension schemes may be seized, and thus expert advice should be taken.
The Trustee in Bankruptcy can apply to the Court, however, to receive a pension in payment for a period, under an Income Payments Order. But the United Kingdom Enterprise Act 2002 has reduced the automatic discharge period for people made bankrupt after 1 April 2004 to one year, so it is anticipated that a Trustee in Bankruptcy will have little time to apply for an Income Payments Order. Also, the bankrupt can make an out-of-court agreement with the Trustee in Bankruptcy to pay over a part of the pension for a specified period.
However, the discharge period can be extended if the bankrupt fails to comply with the obligations of the bankruptcy order. This can happen if the bankrupt for example had made what are deemed to be “excessive” contributions to a pension policy before bankruptcy.
While the United Kingdom has general bankruptcy rules, the specific rules vary between between England & Wales, Northern Ireland and Scotland.
While forum shopping might reduce the length of the bankruptcy period, the end result is the same i.e. all of the bankrupt’s existing assets are taken away and distributed amongst the creditors.
The United Kingdom offers Individual Voluntary Arrangements (IVA’s), which allows individuals to enter into a Scheme of arrangement with their creditors. Such schemes avoid the stigma of bankruptcy.
If a bankrupt debtor is prepared to change their place of Residence and Domicile, we can provide advice on the best jurisdiction to select and put them in contact with a reputable Insolvency Practitioner to ensure that the bankruptcy process is completed in the fastest possible time, or, alternatively, to carry out an Individual Voluntary Arrangement.