A Hull-based legal firm has been wound up by the High Court in Manchester for abusing the UK insolvency regime.
An investigation by The Insolvency Service found Lovell Hill & Co LLP (LCH) had been offering bankruptcy relocation services to Germans seeking to take advantage of the shorter bankruptcy discharge periods in the UK; an act known as bankruptcy tourism.
Acting as bankruptcy relocation advisers, LHC assisted German nationals who wished to wrongly claim their Centre of Main Interest (COMI) was in England and Wales for bankruptcy purposes.
COMI determines which area a person or company is most closely associated for the purposes of cross-border insolvency proceedings.
Investigators found that in one instance, a bankrupt who had never resided in Hull still made a bankruptcy petition based on an address in the city – instead flying into the country and staying at a hotel for bankruptcy appointments.
Scott Crighton, an investigation supervisor at The Insolvency Service, said: “LHC enabled bankrupts living outside the UK to mislead British courts by claiming they were UK residents, to take advantage of the shorter bankruptcy discharge periods.”
People made bankrupt in the UK are discharged after one year, compared to seven in Germany.
Crighton continued: “The company also filed misleading accounts and those in charge failed to cooperate with the investigation.”
LHC had filed accounts showing that it wasn’t trading, however, records found by investigators demonstrated that it had issued invoices to the value of £2m.
Crighton said: “Those who would conduct business in the UK in such a manner should understand that the Insolvency Service will take firm and decisive action to protect the public and the wider international marketplace against their objectionable practices.”