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Bankrupt's COMI: Deutsche Apotheker-Und Arztebank EG v Dr Ralph Rainer Leitzbach & Others

A discharged Bankrupt had intentionally misled the Court as to his COMI being in England and Wales in order to obtain a Bankruptcy Order. Four years after the making of the Bankruptcy Order, the Court annulled it on the grounds that the Court did not have jurisdiction to make the Order in the first place.

This case related to an application made by German bank Deutsche Apotheker-Und Arztebank EG against German national Dr Rainer Leitzbach to annul the Bankruptcy Order made on 17 March 2014. The application was made on grounds the Bankruptcy Order "ought not to have been made".

Article 3.1 of the European Council Regulation on Insolvency Proceedings (No 1346/2000), as in force at the time of the making of the Bankruptcy Order, provides that the court in the debtor's centre of main interest ("COMI") shall have jurisdiction to open insolvency proceedings.  

The Bank submitted that Dr Leitzbach's COMI was not in England and Wales and therefore the court had no jurisdiction to make the Bankruptcy Order. The Bank further submitted if the court was satisfied that the debtor's COMI was not in England and Wales when the Bankruptcy Order was made, that order must be annulled. The court also has an element of discretion in an application to annul a Bankruptcy Order. The court held that if a Bankruptcy Order was made without jurisdiction it should be set aside, without consideration of discretionary matters.

Dr Leitzbach had liabilities of £829,000, of which €525,000 was owed to the Bank, and no assets. No Trustee in Bankruptcy had been appointed and there appeared to be no prospect of any dividend to creditors.

Receipts provided in Dr Leitzbach's evidence in support of his COMI being in England were linked to at least ten separate Tesco Clubcard loyalty cards, despite Dr Leitzbach admitting he did not have a Clubcard in cross examination. There were also four receipts from the same date in various locations including Manchester and London within the space of a few hours, and it was inconceivable that they were paid for by the same person or in the presence of Dr Leitzbach. In cross examination, Dr Leitzbach admitted that not all receipts reflected expenditure of his own, but had insisted that he had been present when all receipts were issued. The Judge did not accept that.

Further discrepancies included large cash sums withdrawn from Dr Leitzbach's bank account with no sufficient explanation. It was also held that the consultancy agreement produced was a sham document.

During the period of his bankruptcy, Dr Leitzbach was registered as a dentist in Luxembourg and undertook a course of dental study in Germany and Austria. Following discharge from bankruptcy, Dr Leitzbach worked as a dentist in Luxembourg before working in his own practice in Germany.

The Bank's delay in bringing the annulment application was noted, as the Applicant had written to the court after the presentation of the bankruptcy petition setting out the debt due to them, but had not raised any issues in relation to Dr Leitzbach's COMI at that time. It was also noted that the Bank had suspicions about Dr Leitzbach's COMI from as early as 28 January 2016, but did not issue the annulment application until almost two years later.

The Judge decided the Bankruptcy Order was obtained on the basis of false information and generated no return to creditors, commenting "it was a bankruptcy in name and form only; there was no administration of any assets of the bankruptcy".

It was held that Dr Leitzbach's COMI was not in England and Wales at the time of the bankruptcy petition or the making of the Bankruptcy Order. The Judge could not accept the consultancy agreement was genuine, and in any event would have found that, as a professional dentist who had been practicing as such in Germany, Dr Leitzbach had never acquired a COMI in England and Wales. The Judge held that Dr Leitzbach's professional domicile was first Germany and then Luxembourg, and at no time was his habitual place of residence in England and Wales.

It was held that the Bankruptcy Order was made without jurisdiction because Dr Leitzbach's COMI was not in England and Wales, and should therefore be annulled.

The court held that if it were to exercise a discretion, it would exercise in favour of annulment stating that Dr Leitzbach had "brought the present situation upon himself".