From The Times September 23, 2009
Kent attracts new type of tourist: Europeans seeking easy bankruptcy Helen Nugent
Tourists have come to Kent for its castles, where widowed queens lived out their days and kings organised the defence of the realm of England. They have come to see Canterbury Cathedral, founded by St Augustine at the end of the 6th century, site of the murder of Thomas à Becket.
Then there is the stately retreat where Winston Churchill brooded, the house where Joseph Conrad wrote, the chalky white cliffs. There are the oast houses, the ancient pubs, the crumbling Cinque Ports and a ragged coastline of beach and marsh and ?knolls where Norman churches stand?.
To that formidable list of attractions may now be added another, which is pulling in a different type of tourist from countries across Europe. Kent is increasingly considered one of the finest places in Europe to declare oneself bankrupt.
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Among the indebted of Germany, Austria, France and Ireland, the English insolvency laws look beautifully lenient. Insolvency experts say that the number of foreign debtors seeking bankruptcy in Britain has risen by 20 per cent, with Kent being a popular destination because of its easy access to continental Europe.
Crippling insolvency laws in Germany mean that it takes between six and nine years to escape debts after being made bankrupt. A bankrupt in Ireland will normally remain an ?undischarged bankrupt? for 12 years, maybe longer. However, in this country a bankruptcy can end in as little as 12 months.
So to Kent, to pay a restorative visit to an insolvency agency and make another trip to a court to file bankruptcy papers.
Observers are calling the phenomenon ?bankruptcy tourism?. The Insolvency Service confirmed that it had identified dozens of cases of people from Europe filing for bankruptcy after appearing to have been resident here for less than 12 months with all or most of the debts being owed to creditors outside Britain.
One German debt expert based in Kent said that he was helping management consultants, doctors, accountants, dentists and lawyers to discharge their bankruptcy.
Marcus Kray, a director of the Erith-based Insolvenz Agentur, which advises German and Austrians how best to take advantage of British bankruptcy laws, said: ?They come from all over the European Union. They like the tax laws here as they are better than the ones in their country.?
Mike Gerrard, a partner specialising in personal insolvency at Grant Thornton, the chartered accountants, said: ?As far as the law is concerned, this [debt tourism] is a legitimate thing to do. However, you could have a long and difficult argument about the ethics of it.?
In 2002, new European insolvency legislation came into force that made cross-border bankruptcies between member states easier to complete. The regulation covers personal as well as corporate insolvencies and, in theory, allows individuals saddled with debt to ?shop around? for the most lenient bankruptcy jurisdiction within the Union.
Many foreign debtors live in Tunbridge Wells, a spa town with its fair share of historic castles. Others go to Greenhithe, whose nearby attractions include the not particularly historic Bluewater Shopping Centre. Some have paid insolvency agencies up to £7,000 for their resettlement.
Mr Kray, whose company promises to ?get rid of the rest of your debts in England after just 12 months?, said that he had helped a management consultant with debts of £16 million to complete the bankruptcy process. Many of his clients opted to stay in Britain after their names had been cleared, he added.
?They come to us with problems. They may not have enough money to pay their income tax, sometimes they are self-employed and their clients haven?t paid their bills. They come from all over the EU. Given the economic climate, we have 20 per cent more than normal. We now have about 150 clients a year.?
Under the current system, there is no minimum time limit for a foreign national to be resident and ?economically active? in England and Wales before petitioning for bankruptcy. However, the Government closely scrutinises applications from people who have been resident for less than 12 months. Being economically active includes being employed or having a source of income, owning a bank account, having a national insurance number or paying rent.
More than 60,000 people in England and Wales were made bankrupt in the past financial year. The Insolvency Service says that foreign nationals account for only a small percentage of this figure.
A spokeswoman said: ?The service examines the affairs of recently relocated foreign nationals very closely, and, if there is evidence that the order ought not to have been made in the courts of England and Wales, will report the matter back to the court with a view to having the bankruptcy order cancelled.?
Wish you were here?
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