VERIFYING A FOREIGN NATIONAL BANKRUPT’S CENTRE OF MAIN INTERESTS (COMI)
To maintain the integrity of the rules [note 1] on cross-border insolvency within the EU, it is important that the bankrupt has his/her COMI (see Part 5 of Chapter 41) within England and Wales if bankruptcy proceedings have been opened here as main proceedings, or an establishment (see paragraph 41.29) here if bankruptcy proceedings have been opened as secondary or territorial proceedings, and this Part gives guidance and information on verifying the accuracy of the stated COMI.
As a general indicator, in all cases where the official receiver is dealing with:
the official receiver should consider seeking further information to assess whether investigation of the COMI should be carried out (see paragraph 43.0.9). However, there may be cases which do not fit this definition where further investigation is needed. The Initial Contact Form Supplement [note 2] may be used for this purpose.
Where the information provided in the Initial Contact Form Supplement (see paragraph 43.0.8) suggests that further investigation into the veracity of the stated COMI is warranted, the official receiver should consider making the enquiries outlined in paragraphs 43.0.10 to 43.0.16.
There have been cases of debtors using accommodation addresses supplied by agents assisting with the petition for bankruptcy. An inspection of the bankrupt’s stated home address may give some indication as to its real use. Additionally, where the official receiver considers that the bankrupt has returned to his/her home nation shortly after the making of the bankruptcy order, he/she may consider inviting the bankrupt to interview. Where the services of a translator or interpreter are required, reference should be made to Chapter 32.3, Part 3.
The official receiver may consider asking the bankrupt for evidence of his/her domestic life in the UK. This should not be limited to rental agreements, but include household bills; in particular telephone bills showing calls made in the UK, credit card statements showing purchases made in the UK or receipts from supermarkets, cash-point slips or bank statements showing cash withdrawals in the UK. Evidence may also be obtained of car insurance or other services such as utilities obtained in the UK.
Some care should be taken as agents will provide debtors with utility bills or TV licences in their name to confirm the accommodation addresses and also supermarket receipts.
The official receiver should seek to obtain the bankrupt’s NI number and UK tax reference and also evidence of payments from his/her employer (where employed). The bankrupt’s employment contract may also provide useful background information – for example, dates when the employment began or the name of the employer – which may be a company or individual connected to the bankrupt (see paragraph 43.0.16).
Many European countries require residents to register their residency with a local authority, police or town hall. When the resident leaves the area (whether they move within the country, or go abroad) they are often issued with a certificate confirming that they have informed the relevant authority that they have left the area and stating their new address. The official receiver should consider obtaining a copy of the certificate from the bankrupt or, where possible, from the authority concerned as evidence of a re-location to the UK. The date of the certificate should be compared to that on the petition.
Information on residency certificates is available for the following countries:
Germany (see paragraph 43.1.6)
The official receiver should obtain evidence that the bankrupt has informed his/her creditors of his/her move to the UK – including the date of that notice.
The official receiver may also consider making enquiries of the bankrupt’s creditors as to when they were advised of the bankrupt’s move to the UK, and also to ask them if they have any information to suggest that the bankrupt is living or working outside the UK. In reality it is more likely that the creditors will take steps to inform the official receiver should they believe that the stated move to the UK is not genuine. The official receiver can seek information by direct correspondence or via the report to creditors.
A sample letter, which may be used by official receivers for this purpose, is attached as Annex A to this chapter. This letter has been translated into German and is annexed in that form to Chapter 43.1.
43.0.15 Bankrupt’s command of English
Consideration should be given to the nature of the bankrupt’s employment in relation to his/her command of the English language. Whilst the ability or otherwise to speak English is not a determining factor in establishing whether the move to the UK is genuine, the nature of the bankrupt’s employment may be relevant in this respect. For example, it might be considered that a salesman, a doctor or any other trade/job/profession requiring frequent contact with members of the public in England and Wales would require at least a workable command of the English language.
Where the bankrupt’s employer is a limited company incorporated in England and Wales shortly before the move to the UK, enquiries should be carried out at Companies House. It is common in cases where the move to the UK is not genuine that the bankrupt will have been a director of the company and resigned shortly before presenting his/her petition for bankruptcy, or that the directors are incorporation agents or relatives based in another EU state.
Whilst the official receiver is restricted in the enquiries he/she can make of a limited company that is not subject to insolvency proceedings he/she should make enquiries into the bankrupt’s role in the company. The location of the registered office of the company is irrelevant as regards establishing the COMI of an employee or director. If the company is registered in England and Wales but carries on business outside the UK, or employs the bankrupt outside the UK then this is evidence that the bankrupt’s COMI is outside the UK.
Where the official receiver is experiencing difficulty in obtaining information from the bankrupt’s employer, he/she may consider making application for the private examination of that person (see Chapter 23 for more information on private examinations).
Where the official receiver holds information which suggests that the bankrupt’s relocation to the UK has been temporary or not occurred at all consideration should be made to making application to the court for the annulment of the bankruptcy order (see paragraph 43.0.18).
Particularly, in cases where the bankrupt notifies the official receiver that he/she has returned to the other country before obtaining their discharge from bankruptcy an immediate application should be made on the grounds that the relocation was transitory and designed to take advantage of insolvency legislation more advantageous to the debtor.
In all cases where the COMI is not in the UK an application should be made by the official receiver for the annulment of the bankruptcy order [note 3] (see Chapter 6A). Had the court been aware that the bankrupt did not fulfil the COMI requirement then it is unlikely that the bankruptcy order would have been made.
The application should request that the order includes provision for costs (see paragraph 43.0.19).
If the bankrupt has failed to provide information in his/her statement of affairs of legal proceedings abroad (questions 1.14 to 1.16 of the statement of affairs), this should be drawn to the court’s attention in any application. In particular, it should be drawn to the court’s attention if the bankrupt failed to disclose the commencement of insolvency proceedings in another member state.
The official receiver should ensure that the annulment order provides for his/her costs to be paid by the bankrupt (see paragraph 6A.74).
The appropriate action to be taken for recovery of the costs would vary from case to case, but should include at least one letter to the (former) bankrupt requesting payment. The obtaining of a judgement and execution of that judgement should be considered if that action is likely to result in the payment of the costs (the official receiver should have some idea as to the asset position of the bankrupt).
It would not, though, be appropriate to seek to have the annulment order overturned and the bankruptcy order reinstated as in suggested in paragraph 6A.77.
Where the application to court results in an annulment of the bankruptcy order, the official receiver should send a letter to creditors to explain the situation. The letter attached to this chapter as Annex B may be used for this purpose.
Where the enquiries outlined at paragraphs 43.0.10 to 43.0.16 to reveal no information to throw suspicion on the veracity of the stated COMI then the official receiver should administer the estate in the usual way. Consideration should be given to advertising the bankruptcy order in a local newspaper for the creditors based on the debtor’s last address outside of England and Wales (see paragraph 43.0.29).
The assistance of specialist agents and solicitors will be required in undertaking most property enquiries outside the UK, and in registering the bankruptcy estate’s interest. Further information in dealing with properties abroad can be found in Chapter 43.0, Annex F, apart from Germany which is covered in Chapter 43.1, Part 2.
Where the services of a translator or interpreter are required, reference should be made to Chapter 32.3, Part 3.
Annex C is a template letter explaining to an enquiring creditor why proceedings have been opened in the UK.
In order that the Service can accurately assess and gauge the practical implications of foreign nationals presenting petitions in England and Wales and measure any forum shopping (see paragraph 41.60) a quarterly return has been created to capture information on cases where bankruptcy proceedings have been commenced by a debtor in England and Wales as main proceedings and the debtor is:-
The return can be accessed on the intranet at http://intranet/Policy/PolicyUnit/InternationalIssues/EU/EC%20Regulation.htm.