Sparkasse Hilden Ratingen Velbert v Benk & Anor

For insolvency jurisdiction, an individual’s centre of main interests is determined objectively at the date of presentation of the bankruptcy petition. Relevant considerations include habitual residence, professional domicile, permanence, regular administration of interests and whether the position is ascertainable by reasonably diligent creditors. A debtor may relocate a centre of main interests even when insolvency is impending, but the court must scrutinise whether the change has substance or is merely an illusion. Temporary residence, contrived or loss-making activities and continuing economic and personal connections with another country may be insufficient. Where the bankruptcy order was made without jurisdiction, the discretion to annul will ordinarily favour annulment.

The Bank sought annulment under section 282 of the Insolvency Act 1986 of a bankruptcy order made on Mr Benk’s debtor’s petition. The central issue was whether his centre of main interests was in England or Germany when the petition was presented and the order made. Mr Benk had moved to England, rented accommodation, maintained an English bank account and claimed to conduct a photography business there. The Bank contended that these arrangements were temporary and contrived, while his professional, personal and economic connections remained in Germany.

The court considered fuller evidence than had been available on an earlier appeal and determined whether the English court had jurisdiction under article 3(1) of the Regulation.

1. Jurisdiction and annulment. The court held that Mr Benk’s centre of main interests was in Germany both when the second petition was presented and when the bankruptcy order was made. The order therefore ought not to have been made under article 3(1) of the Regulation. Under section 282(1)(a) of the Insolvency Act 1986, the court had power to annul it, notwithstanding discharge under section 282(3). Although annulment is discretionary, once lack of jurisdiction is established the presumption is ordinarily in favour of annulment.
2. Applicable approach. The relevant date was the presentation of the petition. COMI is an objective question, although evidence of conduct before and after that date may illuminate the truth of the asserted position. The court applied the established principles that COMI normally corresponds to habitual residence or professional domicile, must have an element of permanence, must be ascertainable by third parties, and must reflect substance rather than an illusion.
3. Application. Mr Benk’s continuing professional status and litigation in Germany, attempts to protect German assets, German creditors, and his close personal and financial dependence on his partner pointed to Germany. His photography activities were treated as window-dressing: they were loss-making, lacked a realistic future, were organised through German connections and were not the source of his insolvency. His and his partner’s residence in England was temporary, and the absence of clear notification to German creditors weakened the claim that COMI had genuinely changed.
4. The English bankruptcy order was annulled.

The judgment states that an earlier bankruptcy order had been annulled and that a previous appeal concerning the second petition had been dismissed. The present application was determined on fuller evidence.