Bankruptcy Tourism in the European Union: Myth or Reality?

34 Pages Posted: 18 May 2016

Date Written: May 18, 2016

Abstract

Does bankruptcy tourism exist in personal insolvency? If so, is bankruptcy tourism a problematic issue for the English and Welsh courts? This article sets out to examine these questions through an examination of case law developments in the field of personal insolvency in England and Wales and in a number of other European Union (EU) Member States.

It is argued that the English and Welsh court’s reputation as a ‘Bankruptcy Brothel’ is one that should be embraced. Viewing the attractiveness of our bankruptcy system as a positive attribute helps focus attention on the increased professional fees and business that increased use of our system brings (“insolvency madame thesis”). Furthermore, it is argued that what we are seeing is not a bankruptcy tourism phenomenon but rather a small and sophisticated group of debtors taking advantage of ANY opportunity to protect assets from creditors.

In focusing on the technical acquisition of Centre of Main Interest (COMI) and avoiding a thorough examination of debtor motive (“debtor motives thesis”) the English and Welsh courts are helping to support what is termed the insolvency madame thesis in this article. This English approach is different to the French courts who are examining debtor motives more closely. In so doing the French courts are giving effect to the intentions of the European legislature but failing to adhere to the free movement of persons philosophy that underpins the EU.

Keywords: bankruptcy, insolvency, personal insolvency, debt, tourism, member states, EU

Suggested Citation

Tribe, John Paul, Bankruptcy Tourism in the European Union: Myth or Reality? (May 18, 2016). Available at SSRN: https://ssrn.com/abstract=2781500 or http://dx.doi.org/10.2139/ssrn.2781500

John Paul Tribe (Contact Author)

University of Liverpool ( email )

Brownlow Hill
Liverpool, L69 3BX
United Kingdom

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