The Good News About Bankruptcy

Boris Becker, the most famous German to ever go through bankruptcy in England, is not a client of mine.

Somebody told me that there is a 2017 video of him on YouTube talking to a German journalist. Apparently, in the video, Mr Becker is quite gleeful about the fact that he had been made bankrupt in England and not in Germany. Bankruptcy takes only 12 months in England. In Germany it can take the better part of 10 years to be discharged (although the German bankruptcy laws have improved as of lately and now the process can be a lot quicker).

From what I understand, Mr Becker didn’t have the best advisors during his bankruptcy. He has been given a further 12-year bankruptcy restriction after the Official Receiver investigated undisclosed transactions occurring before and after the bankruptcy proceedings, totalling over ￡4.5m.

Because of the aftermath of Covid-19, there’s a lot of talk of bankruptcy just now. I received an email about just such a situation this week. 

The only thing is, this email tells of good news. 

Bankruptcy in Germany is different from England. In the former it is the end. And not just because it takes forever to be discharged. You may as well leave the volk such is the shame and social disgrace it brings. The English are closer to the Americans when it comes to bankruptcy. Business failure in London while not quite a badge of honor is not far off, and certainly nothing to leave the country about. As it happens, the English are rather matter of fact about the whole thing. There is a process and, once that is gone through, there is a time for being disbarred from certain business activities and then, well, that’s that, back to normal. The whole thing takes a year. A system that has been designed to help the unlucky, but honest debtor.

But be under no illusion: As Mr Becker's example demonstrates, English courts and the official receiver have absolutely no patience with debtors who try to trick the system, hide assets, or are otherwise insolent towards the rule of law. Any other attitude than a humble and contrite heart won't fly.

For many years I have been helping my German clients understand the benefits of the English bankruptcy regime and even profit from it. This week I received an email that told of how this had benefited just such a client. 

I’ll not go into details for obvious reasons. Suffice it to say, my friend was a man who had invested large sums of money, along with members of his family, in a sector that was doing just fine until the choppy waters from 2008 started to capsize the whole enterprise. 

By 2010, with debts from loans he had guaranteed for mounting and income disappearing, there was only one option: bankruptcy. But my friend is German. Being German I understand all too well the strengths of our national psyche. We do not like to give up – ever. We keep fighting to the bitter end, no matter how the odds are stacked against us. Just take a look at the performance of any German national football team in the last 60 years for an all too vivid illustration of this. 

But I also know our weakness, which is precisely our strength, if taken to an absurd degree. The definition of madness is to continue to do what you know does not bring the results you desire or need. After almost eight years fighting in courts against banks and other financial institutions, with large pockets but little compassion, my friend was at his wits end.

By then his life had been radically altered by the business collapse of 2010. The squabbling and blame that started among the family, all who had invested in the business, soon deteriorated into quarrels and then legal wrangling as things rapidly turned ugly. His marriage started to experience the strain of what was happening. Eventually, that strain was to snap as his wife walked away. 

By 2018 my friend had few friends left and seemingly even fewer choices. And, worryingly, time seemed to be running out on this man in his early 50s. It can be a dangerous moment for someone in such a situation. When all looks futile, hope can drain away and with it, in some extreme cases, so too can life. Thankfully this was not to be one of those cases. Instead, my friend saw an online advertisement and decided to call the number. Why not, he thought, by then he had nothing to lose. 

Two years later, his email says it all. He is in a very different place. How come? Well for a start he called me and I listened to him. I realize now that perhaps I was the first person to listen in years, and certainly the first person to listen to his tale without judgment. Then, right there, we agreed a plan. The first step was to overcome the obstacle in his mind on the subject of bankruptcy. He needed to take this step, and I knew of a way he could do so without the angst he feared. 

My friend moved to England. Declaring bankruptcy is a funny way to start a new life in a different country but he trusted me and, more importantly still, I knew what I was doing. Living in London he found work with his son who had a business here. So my friend started once more working for someone else, and found it surprisingly refreshing. It proved more than just that though. His son’s business thrived and my friend became part of that success. He began to regain some of his business self-respect. But, seeing the smile on his son’s face looking back at him, my friend started to find something else besides. 

He took to England. He took to its eccentric friendly ways. He enjoyed the food, art and culture available in a world city such as London. His mind expanded, but so too did his heart. My friend didn’t realize the toll of the emotional impact from his fight against bankruptcy in Germany. That desperate struggle had made him feel all too old and alone. England, his new world, its work and social life, and especially new friends, started to make him feel young again. He saw unexpected horizons open up and with them all sorts of possibilities as the pain of the last years was first healed and then quietly laid to rest. 

Then, out of the blue, he received a letter from the British courts. 

That morning as he opened the envelope his heart pounded just that little bit faster. It had done so frequently these last years when he received official post from courts. This time, on reading the letter, he went straight to his computer and sent me an email. 

The letter was a Certificate of Discharge. It meant he was no longer bankrupt. He was free to start a business, run a business, at liberty to make as little or as much money as he could by doing so. Legally, he was free. What it also signified was that the misery that had begun in 2010 had ended.

Until you have been in that situation, and I help a lot of people who have been, the relief of receiving such a letter can only be imagined. But, believe me, that piece of paper can be more often than not life changing. 

So that morning as I opened and read the email from my friend I smiled. We have become friends as well as business associates. And this is precisely the type of email I like to get. It tells of a satisfied customer; but it also tells of more, so much more. And, besides, it brought an always-welcome invitation to a celebratory lunch to discuss future business plans. I smiled again.

Unfortunately, because of a Brexit, EU citizens going through bankruptcy in England will no longer be able to have their discharge recognized by courts in other EU countries. Thankfully, the Republic of Ireland has recently copied and pasted the English bankruptcy law and have replaced their ancient legal framework with the modern and user friendly English approach. And again, like in England, it takes only a year in Ireland to get discharged.

So if you don’t mind the rain and the Guinness, you may well consider Ireland for making a fresh start if you are a EU citizen burdened by high debt. I lived in Ireland for a while and can certainly recommend the place. Get in touch and I can recommend a pub or two.