Hull-based legal firm Lovell Hill & Co LLP (LHC) was wound up by the High Court in Manchester for abusing the UK insolvency regime by offering bankruptcy relocation services to Germans seeking to take advantage of the shorter bankruptcy discharge periods in the UK bankruptcy tourism.
The company, previously known as Law Partners LLP, was wound up on 20 January 2014, following an investigation by the Insolvency Service.
LHC acted as bankruptcy relocation advisers to 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, and people made bankrupt in the UK are discharged after one year while it takes seven years in Germany.
Commenting on the case, 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.
The company also filed misleading accounts and those in charge failed to cooperate with the investigation.
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.
Investigators discovered that, in one particular instance, a bankrupt had never occupied the property in Hull given to the court as his main residence but instead had flown in for appointments, staying in a local hotel.
Properties connected to LHC were also supposedly occupied by several German-speaking bankrupts at the same time. The occupants were rarely on the voters roll and did not normally pay any bills.
The occupants were also allegedly employed by companies that turned out to be dormant and which were also controlled by the same people as LHC. The jobs themselves were terminated as soon as the bankrupts were required to make payments towards their creditors.
LHC also arranged for post delivered to the bankrupts at the Hull addresses to be collected, scanned and forwarded to them abroad, as well as arranging to open English bank accounts for them, which were largely used for foreign transactions.
Further, LHC filed accounts showing that it wasnt trading whereas records found by investigators showed that it had issued invoices to the value of 2m