In a case which underlines the difficulties that can arise in the recovery of debts in an age of global trade, an itinerant entrepreneur has persuaded the High Court that he was wrongly declared bankrupt in respect of a $17 million debt on the basis that he had not ‘carried on business’ in England and Wales during the three years prior to the bankruptcy petition being presented.
The businessman had, through a Luxembourg-registered company, purchased an aircraft for commercial use and had signed a personal guarantee in respect of money loaned by a bank for that purpose. The company defaulted on the loan and the bank sought to enforce the personal guarantee.
The bank obtained a bankruptcy order against the businessman on the basis that he had interests in various UK-based companies and partnerships and that he had been engaged in acquiring and chartering aircraft in England and that he had therefore been ‘carrying on business’ in England and Wales within the meaning of the Insolvency Act 1986 during the relevant period.
However, the businessman insisted that he had neither been resident nor carried on business in England and Wales at any point in the three years before the bankruptcy petition was presented. He said that he had left the UK permanently after the break-down of his marriage in 2007, was a resident of Monaco and had his centre of business interests in Florida.
In upholding the businessman’s appeal, the High Court noted that it was for the bank to show that the English courts had jurisdiction to make the bankruptcy order. The businessman had been a director of English-registered companies or a member of England-based limited liability partnerships during the relevant period; however that was insufficient to establish that he had ‘carried on business’ in England.
Although there was evidence that the businessman had signed the loan agreement in England, the evidence that he had carried on in England the business of acquiring aircraft for the purpose of chartering was ‘extremely thin’ and ‘totally insufficient’ to establish jurisdiction in the English courts to make the bankruptcy order.