A briefing about insolvent estates and what happens to overseas assets

1. OUR SHRINKING WORLD
“You must be really busy?”
Bankrupts with overseas assets
“You must be really busy?”
There world appears to be getting smaller. Knowledge and information can be researched and found,
The is a lot of conflicting news coming out of our media. Unfortunately bad news sells
There is a lot the conflictingfew keys. Global travel and trade means and “double dip”consider it the
and so the doom touchgloom news coming outto win the headlines that more bad news sells
instantly, at of and of a merchants seem of our media. Unfortunately people trumps
and so the doom and gloomsome of them may to win the headlines and “doublefell 35% and
norm to travel overseas and elect to buy assets abroad.
“green shoots” every time. merchantsthat in the last quarter administrations dip” trumps
The fact seem
“green shoots” readers time. ignored. The truth islast quarter Spain, France or Portugal. very
liquidations 14% is largely The fact that in the that insolvency practitioners are35% and
I’m sure most
every will know someone who owns property in administrations fell not
liquidations 14% is largely ignored. The truthnotthat insolvency practitioners are not very
busy at present and are looking to scale back, is expand.
busy at present and my overseas assets if I am madeexpand. in the UK?’ will be the last thought on
‘What happens to are looking to scale back, not Bankrupt
As with the turn of 2009/10 when everyone expected an upswing in business failures, so
those intrepid travellers’ minds.
Asis expected now. 2009/10 when everyone expected an upswing in business failures, are
it with the turn of Let us hope, for the sake of UK PLC, that the doom-mongers so
it UK legislation
wrong again. now. Let us hope, for the sake of UK PLC, that the doom-mongers are
is expected
wrong again.
One reason given for the good news is the belonging to the Bankrupt, wherever situated, vests in
The Insolvency Act 1986 states that all property Crown’s generous Time To Pay (“TTP”)
One reason under the the Therefore under the Crown’s generousthe powerThe BPSS was
agreements in Bankruptcy. good PaymentsUK law theService has Time To Pay (“TTP”)assets.
the Trustee given for Business news is Support Trustee (“BPSS”). to deal with all
agreements under the Business FromSpain at the time Service subject to a Bankruptcy Order, that is
For example, if you own a property in you are
launched in your Bankruptcy Estate. Most other countries have a (“BPSS”). TTPbut, in practice, the
in November 2008. Payments to December 2010 395,000 The agreements
then Support BPSS was
an asset similar approach
launched incountry in which the property then to December 2010 395,000 the good news is
were of the by HMRC, deferring £6.83 billion of tax. control. side of TTP agreements
law made November 2008. From is located retains The flip
were made by HMRC, deferring £6.83 billionthe scheme. flip side of the good news is
the risk that there will now be a withdrawal of of tax. The
the risk that there will nowsecurewithdrawal of the scheme.
In order for the Trustee to be a the assets some additional steps need to be taken locally in addition
to here in the UK. Often, some form of Court order is needed for the Trustee’s appointment to be
Principles of Time To Pay
recognised and given local effect.
Principles of Time To Pay
Europe
Time To Pay agreements fall within the scope of HMRC’s discretion provided their
Time To Pay agreements can only be the :scope of HMRC’s in your COMI (“Centre of Main
Under EC legislation you fall within pursued for Bankruptcy discretion provided their
published principles are followed including
published principles agreed whereincluding is satisfied that thewhich aim to determine where your
TTP is only are followed HMRC
• Interest”). Your COMI is defined by a number of considerations customer cannot pay their
• permanent residencyagreed be regarded as being. It considers,the customer cannot the geographical
TTP is only should wheredate(s) is satisfied that amongst other things, pay their
liability on the actual due HMRC
• determination of your offers place date(s) banking and/or residency. can realistically afford.
liability on the home, the bestwork,
The customer actual due of payment proposals that they
• The customer offers theimproves during the TTP period then realistically contact
If their ability to pay best payment proposals that they can they must afford.
For example, if you own a property in Spain and are made Bankruptthen they must in accordance
If their and increase their payments/clear the debt period in the UK, then contact
HMRC ability to pay improves during the TTP
with EC legislation increase their payments/clear the debt seen as the main proceedings in Spain.
HMRC only the Bankruptcy Order in the UK should the customer will have the means
• TTP is and agreed where HMRC believes that be
• TTP is the taxes included in the TTP arrangement and any other taxes outside the
to pay only agreed where HMRC believes that the customer will have the means
Therefore, the Trustee will seek to realise the equity, if any, in the Spanish property for the benefit of
creditors.pay the taxes is likely toin due duringlocalTTP period any other taxes property from any
to The Trustee included apply TTP arrangement and to protect the outside the
arrangement which become the to the the Spanish Court
• other recovery action beingas short as possible the TTP period
arrangement which become duein Spain.
The TTP period is commenced during
• The TTP period is as short as possible
Underdifficulty with this particular scenario at reduce the amount of tax due as part as theTTP may
The no circumstances can HMRC ever present is the realisable value (or lack of of a case
Under no circumstances can HMRC ever reduce the amount of tax due as part of a TTP
arrangement.assets:
be) of those
arrangement.
• Property prices may have fallen.
HMRC go on to say that the TTP Scheme is about helping the “Can’t Pays” to manage
HMRC go onvalue of the Euro vs. “Won’t has is about helping with“Can’t Pays” to manage
their position, to say that the TTP Scheme diminished.away the things for longer while
• The not to assist the Sterling Pays” to get
their position, not to assist the buyers are unable toget away with things for longer while
incurring Many potential property “Won’t Pays” to secure the finance to purchase.
• additional liabilities.
incurring additional liabilities.
What equity there once was may have gone and, therefore, the asset could become a liability.

2. Northampton
Northampton
Northampton
Northampton
100-102
100-102
100-102
100-102
St James Road
St James Road
St James Road
St James Road
Northampton
Northampton
Northampton
Northampton
NN5 5LF
NN5 5LF
NN5 5LF
Northampton
NN5 5LF
DX15626
100 - 102
DX15626
DX15626
DX15626 3
Northampton
St James Road
Northampton 3
Northampton 3
Northampton 3
Tel:
Northampton
Tel:
Tel:
Tel:
01604 754352
NN5 5LF
01604 754352
01604 754352
01604 754352
Fax:
Fax:
Fax:
Fax:
01604 751660
DX15626
01604 751660
01604 751660
01604 751660
Northampton 3
Tel: Outside Europe
Banbury
01604 754352
Banbury
Banbury
Tel:
Banbury
47 North Bar
As tax payers we should all want those who can do so to pay their taxes – relieving the
Fax:
47 North Bar
47 North Bar
North Bar
01604 754352
01604751660
47Banbury
Banbury
If your assetsus, maximisingEC then you mightthe Crown. We want them toasact more
burden on are outside the realisations for hope that international laws such UNCITRAL
Banbury
Fax:
Banbury
Oxon
Oxon
Oxon
(“United payers we should allon International Trade Law“) Model Law on Cross-Border Insolvency
As tax Nations Commission want those who can do so to pay their taxes – relieving the
commercially.
01604 751660
Oxon
OX16 0TJ
OX16 0TJ
Banbury
OX16 0TJ
OX16 0TJ apply. UNCITRAL includes countries such asfor the Crown. Weand United States of America, to
burden on us, maximising realisations Mexico, South Africa want them to act more
47 North Bar
Tel: name a few, and aims to promote co-operation between Courts in cases of cross-border insolvency. In
commercially.
Tel:
Tel:
Banbury
Tel:
01295 272121
Banbury All requests for TTP for sums in excess of £1M will now be referred to independent
01295 272121
01295 272121
Oxon layman’s terms UNCITRAL confirms that where an individual’s assets are being sought by a member
01295 272121
Fax: Bar
47 North
Fax:
Fax: review. This will be undertaken by one of a panel of national firms much as Bank
state,requests for can apply sums in excess that£1M willtonow be referred recognise the UK’s
All the Trustee TTP for to the Court in of countryeverrequestcommercial approach.
them to to independent
OX16 0TJ
Fax:
01295 256466
Banbury
01295 256466
insolvencyhave been. as though it was present in of a country.of more
Reviews legislation Hopefully this will encourage an
01295 256466
01295 256466
Oxon
Tel:
review. This will be undertaken by one that panel national firms much as Bank
OX16 0TJ
Coventry
01295 272121
Coventry
Coventry
Coventry
Kings Chambers
Fax:
Kings Chambers Reviews have been. Hopefully this will encourage an ever more commercial approach.
Kings Chambers
Kings Chambers
01295 Tel:Road
Queens
Queens Road
256466 In the absence of UNCITRAL
Queens Road
Queens Road
01295 272121
Coventry
Coventry
Coventry
Coventry
Fax:
CV1 3EH
CV1 3EH
Coventry
CV1 3EH
CV1 3EH
01295 256466 If you have assets in do if a client needsthose includedPay?
What can you countries that fall outside Time To in UNCITRAL i.e. Dubai, then the
Kings Chambers
Tel:
Tel:
Tel:
Queens Road
Tel: outcome could be bleak. It has been reported that where individuals have incurred unmanageable
02476 226839
02476 226839
02476 226839
Coventry
02476 226839
Coventry
Fax:
Fax:
debts in Dubai you in order a client needs Time To Pay? have simply fled the country
What can then do if to avoid jail, which often happens, they
leaving theirhoped that TTP jobs be avoided. planning to return. at their height some directors
It must be cars, houses and can without ever When they were
Fax:
CV1 3EH
KingsFax:
02476Chambers
02476 520794
520794
02476 520794
02476 520794
Queens Road
Tel:
Coventry
were reportedly using TTP as a cheaper source of funding than their Banks. Some 95%
Insolvency hoped that TTP can beso, while the press are reporting a height some directors
It must be tourism are approved avoided. When they were at their hardening of attitude
Milton 226839
Milton Keynes
02476 Keynes
Milton Keynes
Suite 3EH
CV1
Milton Keynes
Suite 1C
Fax: of all applications
Suite 1C
Suite 1C
Oak House
02476 House
1C
520794
Oak Tel:
were the Crown using TTP as a of rejection rates this is only from 2.7% being Some 95%
from reportedly and a doubling cheaper source of funding than their Banks. rejected in
Oak House
Oak House
Woodlands
Woodlands
Woodlands
02476 226839
Woodlands
Business
Youall to 5.8% in 2010. approved so, while the(once claimed to be Ireland’s richest man for his
of may recall the are
2009 applications Bankruptcy of Sean Quinn press are reporting a hardening of attitude
Business Park
MiltonFax:Park
Keynes
Business Park
Business Park
Linford Wood West
Linford Wood West
Suite 1C
Linford Wood West
successes in the manufacturing and insurance sectors) in Northern Ireland 2.7% being rejected in
from the Crown and a doubling of rejection rates this is only from in November 2011. Despite
02476 520794
Linford Wood West
Milton Keynes
Milton Keynes
Oak Keynes
MiltonHouse
Hitchin
Milton Keynes
the Bankruptcy in 2010. this is an admission of “being unable to pay your bills …successfully
2009 toTTP isOrder being made in Northern Ireland (therefore within the UK), it was as and
Where 5.8% required
MK14 6EY
MK14 6EY
Woodlands
7MK14 6EY
MK14 6EY
Paynes Park overturned by one of Mr Quinn’s largest creditors who applied to the Court on the basis that his COMI
Hitchin
Business Park
Tel: when they fall due” – a definition of insolvency. Consequently there is a risk, if things
Hitchin
Tel:
Tel: was not in the is required this is an admission i.e. his COMI had beenpay your bills … as and the
Where TTP UK but in the Republic of Ireland of “being unable to incorrectly determined by
Linford Wood West
Tel:
7 Paynes Park
01908 317387
SG5 1EH
01908 317387
01908 317387
Milton Keynes
01908 317387
subsequently don’t turn out for the best, of directors trading after they knew the company
Court. they fall due” – a definition of insolvency. Consequently there is a risk, if things
Hitchin
Fax:
Fax:
Fax:
MK14 1EH
SG5 6EY
Fax:
01908Tel:
when
was insolvent and thereby risking wrongful trading. We are always happy to advise in
01908 310623
01908 310623
01908 310623
310623 subsequently don’t turn out for without obligation, to ensureafter they knew the company
these circumstances, free and the best, of directors trading that damage is limited and
01462 429718
Tel: The duration of Bankruptcy in the UK is 1 year whereas it is 12 years in Ireland. Clearly there are
01908Fax:
Tel:
Southampton
317387
Southampton
01462 429718
Southampton
was insolvent so far as your COMIwrongful trading. We are always happy to advise in
risks reduced and thereby risking to be in one country over personal liability for an Irish
some benefits in defining possible. Directors will wish to avoidanother. Whilst this is their
Southampton
Suite 47
example there are many reported German and other examples too. that damage is limited and
these circumstances, free and without obligation, to ensure
01462 429798
Fax:
Suite 47
Fax:
Suite 47
Suite 47
Enterprise House
01908 310623
Enterprise House
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Enterprise House
company’s debts.
Enterprise House
Ocean Village
Ocean Village
Ocean Village
risks reduced so far as possible. Directors will wish to avoid personal liability for their
Ocean Village
Southampton
Southampton
Southampton
Southampton
Southampton
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Further advice
Milton Keynes
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Enterprise 1C
Suite House
Tel:
Tel:
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What can you do now?
Ocean House
Oak Village
Tel:
02380 574715
02380 574715
02380 574715
Clients should give careful consideration to their financial position whether at risk of Bankruptcy or
Woodlands
Southampton
02380 574715
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Business
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What can you do now?
not.
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Linford Wood West
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Tel:
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If you are concerned about anyone’s debts or Management Team. Offering the bestthen please
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Fax: contact BRI Business Recoveryissues arisingand irrespective of the on anyfee outcome related
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remainsplease contact aone priority. the BRI Management Team. Offering the best advice
matter, BRI’s number member of
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If you have a client who priority.
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CHARGE, completely independent,asconfidential and withoutgeneral professional adviser and is and
background information for the obligation.
Important Note: This Briefing is intended as information for the general professional advisernot a is not
Important Note: This briefing has been prepared
SO14 3XB a comprehensive statement we recommend that expert advice be taken on specific issues arising bepractice. on specific issues
comprehensive statement of the law – of the law - we recommend that expert advice in taken
arising in practice.
Important Note: This briefing has been prepared as background information for the general professional adviser and is not a
Tel: comprehensive statement of the law – we recommend thatof BRI (UK) Ltd taken on specific issues arising in practice.
BRI Business Recovery and Insolvency is a trading name expert advice be
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