Deutsche Apotheker-Und Arztebank EG v Leitzbach & Anor

Where an English bankruptcy order was made without jurisdiction because the debtor’s centre of main interests was outside England and Wales, the order should be annulled without balancing discretionary considerations. The applicant must have sufficient interest as a person affected by the order, assessed at the date of the annulment application. Alternatively, lack of jurisdiction is a very powerful factor and will almost invariably justify annulment.

COMI is determined objectively. Relevant matters include habitual residence, professional domicile, permanence, regular administration of interests and ascertainability by reasonably diligent creditors. A purported relocation made in the face of insolvency requires close scrutiny to determine whether it has substance or is merely illusory.

Deutsche Apotheker-Und Arztebank EG applied under Insolvency Act 1986, section 282(1)(a), to annul Dr Leitzbach’s bankruptcy order made on 17 March 2014. The bank alleged that his centre of main interests was not in England and Wales when he presented his bankruptcy petition and that the order had therefore been made without jurisdiction.

The debtor maintained that he had been resident in England and Wales and had established a consultancy there. The bank challenged the reliability of his evidence and relied on his professional registrations and activities in Germany and Luxembourg. The central issues were the location of COMI and whether the court retained a discretion to refuse annulment despite the absence of jurisdiction.

1. Disposition. The application was allowed and the bankruptcy order was annulled. The court held that the order had been made without jurisdiction because the debtor’s COMI was not in England and Wales.
2. COMI. The court adopted and applied the principles set out in Sparkasse Hilden Ratingen Velbert v Benk [2012] EWHC 2432 (Ch) and endorsed in Commerzbank AG v Brehm [2014] BPIR 359. COMI is an objective question. It requires consideration of habitual residence, professional domicile, permanence, regular administration of interests and whether the position is reasonably ascertainable by creditors. Motive for acquiring an English COMI is irrelevant if the relocation is genuine, but the evidence must be scrutinised carefully where insolvency is contemplated.
3. Jurisdiction and annulment. Following Raiffeisenlandesbank Oberosterreich AG v Meyden [2016] EWHC 414 (Ch), the court held that a bankruptcy order made without jurisdiction must be set aside without consideration of discretionary matters. The applicant must nevertheless show sufficient interest as a person affected by the order. That standing is assessed at the date of the annulment application, which answers the concern about applications made many years after the order.
4. Alternative discretion. If a residual discretion remained under section 282(1)(a), lack of jurisdiction would be a very powerful factor. The court would almost invariably annul, particularly where the debtor had contributed to the making of the order without jurisdiction.
5. Facts. The debtor’s evidence was unreliable and included deliberately manufactured receipts. The consultancy agreement was a sham intended to support an English COMI. Third parties would have regarded him as professionally domiciled first in Germany and then in Luxembourg, and there was no genuine permanent relocation to England and Wales. The bankruptcy produced no return for creditors, and the delay in applying did not justify refusing annulment.