‘Duty of candour’ to court on bankruptcy
The High Court has rescinded the bankruptcy adjudication of a German national who had asserted that his centre of main interests (COMI) was in Ireland.
Under Irish law, this would have allowed him to be discharged from bankruptcy after a year.
Mr Justice Liam Kennedy granted the Official Assignee, who had alleged material non-disclosure on Denis Melcher’s original application, an order rescinding the adjudication.
‘Serious omissions’
The judge ruled that Melcher should lose the protection of the bankruptcy as a result of his “serious omissions” relating to the information he had disclosed to the court.
“I do not regard the non-disclosures as technical, innocent or non-culpable,” the judge stated.
Melcher had entered into a residential lease in Barcelona at the time when he asserted he was living in Ireland and had failed to disclose ongoing litigation in Spain relating to rent arrears on that property
Mr Justice Kennedy pointed out that, under Irish law, applicants for bankruptcy must not only set out grounds and facts supporting their claim to Irish COMI, they must also fully and fairly disclose any material facts that might point to a different COMI determination.
“They must disclose both helpful and unhelpful evidence, and any order may be set aside if material information is withheld,” he added.
Similarities
The judge said that an individual who genuinely established Irish COMI, in substance as well as form, could file for bankruptcy in Ireland, noting that the phenomenon was a recent development, as a result of a change in Irish law in 2016.
“However, applicants owe the court a duty of candour, and the court must satisfy itself that Ireland is in fact their COMI (and that the disclosure is complete in other respects),” he added.
Mr Justice Kennedy said that the similarities between Melcher’s application and others prompted questions about the substance of the arrangements put before the court, adding that they did not necessarily undermine the legitimacy of his or any other individual application.
‘Tightening judicial attitude’
He described it as “remarkable” that so many applicants should have lived at the same rental accommodation and that so many Germans starting a new life in Ireland set up an Irish company with the same company secretary.
Lawyers at Fieldfisher, which acted for the Official Assignee in the case, said that the decision signalled “a tightening judicial attitude” toward potential ‘bankruptcy tourism’.
“Applicants who have recently relocated to Ireland, maintain substantial foreign connections, or operate through complex international structures, can expect much greater scrutiny of their COMI evidence and underlying financial arrangements,” they added.