Sean Quinn has been declared bankrupt by the High Court in the Republic of Ireland on application by IBRC (formerly Anglo Irish Bank). The bank first had to apply to the courts in Northern Ireland to have the bankruptcy order obtained there by Mr Quinn annulled. The bank argued successfully that the Northern Ireland court did not have jurisdiction to make the order as Mr Quinn’s “centre of main interests” (“COMI”) is in the Republic of Ireland and not in Northern Ireland.

“Centre of Main Interests” or COMI

In determining a person’s COMI, the courts will usually have regard to the place where he carries on business or earns a living and to his country of habitual residence. In general, a person is required to have lived and worked in a country for several months before he may be regarded as having established a COMI there. A person’s COMI must be ascertainable also by third parties, in particular by his creditors.

Mr. Quinn’s COMI

In finding that Mr Quinn’s COMI is in the Republic of Ireland, the Court had regard to the following:

• Although Mr Quinn is a UK taxpayer, 20% of his tax is, by agreement, paid in the Republic
• He has been habitually resident for 32 years in the Republic
• He holds an Irish passport, but does not hold a UK passport
• Evidence that he was considering establishing a new business in Cavan
• Mr Quinn’s main interests in the months prior to his bankruptcy had been the litigation in which he was engaged against IBRC, which was being conducted in Dublin

Mr Quinn claimed that he had been working from an office in Derrylin Enterprise Park in County Fermanagh for a number of months. However, this address had not been disclosed in his petition for bankruptcy. Further, the Court noted that (i) neither the telephone number nor address of this office appeared in any trade directory or on the Internet; (ii) neither IBRC nor the Revenue Commissioners had been informed of it; and (iii) Mr Quinn was unable to exhibit any correspondence sent to him at this office. While the Court accepted that Mr Quinn was keen to protect his privacy, it found that this could not be reconciled with the requirement that a person’s COMI should be ascertainable by third parties.

Bankruptcy Discharge Periods

The Northern Irish ruling deprived Mr. Quinn of the twelve month period of discharge from bankruptcy under UK law. The corresponding period under Irish law is twelve years, or five years where the expenses, fees and costs of the bankruptcy and of the bankrupt’s preferential creditors are paid in full by the bankrupt.

It is anticipated that the discharge period under Irish law will be reduced, possibly to as little as three years, under new personal insolvency legislation expected to be published before April 2012. The Government published a draft general scheme of the proposed legislation on 25 January 2012. To view an article on the draft scheme please click here.

Contributed by Niamh Cacciato.