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Bankruptcy Immigrants

posted by Adam Levitin

Fascinating story in the Guardian about Irish debtors temporarily moving to the UK in order to gain access to more favorable bankruptcy law.  I guess the Brit's have a more lenient version of 522(b)(3) or a looser good faith filing doctrine/plan approval/discharge requirement.  I wonder how long this sort of international loophole will remain open within the EU.  I wouldn't be surprised to see a lot of Spanish immigrants to the UK between more favorable bankruptcy law (although Spain recently liberalized its bankruptcy law) and the Spanish economy.    

Comments

It has been a problem for a while in Ireland - 12 years to get your discharge is a bit much:

http://www.businessspectator.com.au/bs.nsf/Article/Irelands-brutal-bankruptcy-reality-pd20101109-AZRTF?OpenDocument

http://www.guardian.co.uk/business/2011/feb/18/ireland-property-crash-bankruptcy-tourism

Irish bankruptcy reform will take the waiting period down to three years - but I am not sure of the present status of the proposed change:

http://www.reuters.com/article/2012/01/25/ireland-bankruptcy-idUSL5E8CP35U20120125


It started with the Germans and the Irish have now caught on. Anyone interested in the background and drivers might like to take a look at a thing I co-authored a while back for the International Insolvency Review... http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1630890 Am not sure I hold with our conclusion anymore. Although the EU Regulation on Insolvency Proceedings is currently being reviewed by the European Commission and amendments are expected in the next 1-2 years, I suspect the fundamental EU law principle of free movement will hold sway. In other words, it is more likely we'll see increasing convergence of national laws via domestic reform initiatives of the sort being pursued in Ireland at the moment.

I have written short updates on the bankruptcy reform process in Ireland and a recent high-profile cross-border case, these might be of interest:

http://www.compasscayman.com/cfr/2012/04/11/Good-fences--Cross-border-bankruptcy-law-and-Ireland%E2%80%99s-%E2%80%9Cother%E2%80%9D-debt-crisis/

http://www.jordansinsolvencylaw.com/articles/guest-post-ucl-s-joseph-spooner-on-the-modernisation-of-irish-personal-insolvency-law

The current timeframe for reform in Ireland is that a Bill is due to be published before the end of June, although it may be closer to the end of 2012 before legislation is enacted: http://www.irishtimes.com/newspaper/ireland/2012/0427/1224315234033.html

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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

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