The Growth of Bankruptcy Tourism in the United Kingdom

"Bankruptcy Tourism" or "Forum Shopping" are both terms attributed to the strategy employed by debtors who chose the optimal jurisdiction to initiate insolvency proceedings. There are genuine situations where debtors relocate, becoming subject to the jurisdiction of the country they have moved to. However, the courts and the Insolvency Service have become increasingly aware of an abuse of the system whereby debtors relocate to avoid draconian insolvency laws for a more favorable system.

Under the English bankruptcy regime a bankrupt is automatically discharged after one year, compared to at least six years in Germany and 12 years in Ireland. The influx of debtors to England is hardly surprising given such contrasting regimes across Europe, and the EU legislation facilitates such a choice. Unless the laws applying to bankruptcy across the EU are harmonized, England will continue to be a tourist hotspot.

The full article appears in 25 Insolvency Intelligence, Issue 1 (2012).