'Bankruptcy Tourism' Under the EC Regulation on Insolvency Proceedings: A View from England and Wales

International Insolvency Review, Vol.19, No. 3, pp.181-208, 2009

49 Pages Posted: 27 Jun 2010 Last revised: 21 Aug 2012

See all articles by Adrian Walters

Adrian Walters

Chicago-Kent College of Law - Illinois Institute of Technology

Anton Smith

Geldards LLP

Date Written: June 26, 2010

Abstract

This paper provides an account of the emergent phenomenon of ‘bankruptcy tourism’ - forum shopping by debtors for favourable personal insolvency law - within the EU and with particular reference to England and Wales. After outlining the structural features of the European legal framework that make forum shopping for personal insolvency law possible, including the EC Regulation on Insolvency Proceedings, and explaining why England and Wales in particular has proved to be an attractive ‘tourist’ destination, the article charts how the official receivers and the courts in England and Wales have sought to manage the influx of foreign bankruptcies in terms of legal principle and process drawing on two reported cases, Eichler and Mitterfellner. It will be seen that the institutional response in England and Wales has been twofold. First, the ‘problem’ of forum shopping debtors has been framed as a problem of policing the line between genuine and fictional relocations. Secondly, there are signs that the procedural onus on debtors to evidence their claim to English jurisdiction before a bankruptcy order is made has been increased, a move that can be interpreted as a form of institutional resistance designed to raise the barrier to entry. Having sought to illuminate the problems, costs and inconvenience associated with forum shopping from a practitioner standpoint, we explore the ‘good’ versus ‘bad’ forum shopping question and consider the scope for reform of the EC Regulation. Adopting a creditor perspective, we conclude provisionally that the Regulation could usefully be reformed to limit the scope for insolvent debtors to switch their COMI in anticipation of filing for bankruptcy.

Keywords: Bankruptcy, Forum Shopping, EU Law, Cross-Border Insolvency

JEL Classification: K19, K29, K41

Suggested Citation

Walters, Adrian and Smith, Anton, 'Bankruptcy Tourism' Under the EC Regulation on Insolvency Proceedings: A View from England and Wales (June 26, 2010). International Insolvency Review, Vol.19, No. 3, pp.181-208, 2009, Available at SSRN: https://ssrn.com/abstract=1630890 or http://dx.doi.org/10.2139/ssrn.1630890

Adrian Walters (Contact Author)

Chicago-Kent College of Law - Illinois Institute of Technology ( email )

565 W. Adams St.
Chicago, IL 60661-3691
United States

Anton Smith

Geldards LLP ( email )

The Arc
NG2 Enterprise Park, Enterprise Way
Nottingham, NG2 1EN
United Kingdom

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