SOUTHEND COUNTY Court on Tyler’s Avenue in this Essex town stands near an unattractive metal bridge, with Churchill’s Cafe and Bar close by for those needing refreshment after spending time between its walls.

The building has become known to several Irish people seeking the protection of UK bankruptcy laws, most notably John Fleming of the once high-flying Fleming Construction firm.

The court has earned a reputation for being “extremely debtor-friendly”.

Locations such as Southend, Macclesfield in Cheshire, or a host of other less-frequented towns have become the destinations of choice for Irish fleeing unrepayable debts.

In trade parlance, as pointed out by Mrs Justice Sonia Proudman last week when she overturned Priory Hall developer Tom McFeely’s bankruptcy, such people are “forum shoppers”.

Fleming received unwanted publicity for his action, but others have managed to get through the process with not a headline in sight, according to one Dublin-based insolvency expert.

Nothing in this is illegal, even if it is regarded as improper in Ireland. Under European Union law, EU citizens – with the exception of those of Denmark – are able to go bankrupt in other member states. However, they must first prove that their “centre of main interest” lies in the United Kingdom and not back home in Ireland.

A definition of “centre of main interest” is illusive but is evolving, leading the chief bankruptcy registrar, Dr Stephen Baister, to write two years ago that there is no agreed legal authority.

Common sense, he said, “might indicate that a few days, or even a few weeks would be unlikely to suffice” since that would be at odds with a claim that a person lived in the UK on a regular basis.

Four years ago, courts in Kent were overwhelmed by Germans – many of them dentists – travelling overnight in buses to become bankrupt in the UK rather than face seven years before a bankruptcy discharge at home. Forms were handed out and filled in as they travelled, before a speedy bankruptcy order was issued in many cases within hours the following morning.

Since then, rules have been tightened and travel to the UK by Germans has become less worthwhile, partly because the UK has looked more closely at the proofs of residency.

“They were tipping up at the Hastings County Court, loads of them. What is happening with Ireland is nothing in relation to that,” says Louise Brittain, of Deloitte in London.

For some, the tougher rules left many Germans with large bills for accommodation and legal services that failed to produce the desired result, says German lawyer Tobias Verlende.

The UK Insolvency Service identified 143 “possible individual forum shoppers” in 2010, including two from the Republic. Last year, the total number rose to 205, including 11 Irish.

The real figure is considerably higher, since many more file applications with no previous Irish address mentioned, complete with paperwork to show that they have been living in the UK.

Considerable trouble is taken by those properly advised. Homes are rented, mobile telephones are bought and used, while debit cards are used daily – “even to buy a Mars bar” – to establish residency.

Indeed, some go further, with one Irish firm allegedly offering a “one-stop shop” where phones and debit cards are given to Liverpudlians to lay down a trail for someone who never left Ireland.

Since April 2011, following guidance from Baister, applications from Irish people who have been living for less than six months in the UK have tended to go before the High Court in London.

Properly advised, however, most applicants should never see the High Court, with their cases instead being dealt by district judges juggling bankruptcy cases amid volumes of other work.

“Registrars in London would deal with bankruptcy every day of the week, but others elsewhere would have different levels of exposure,” said one London-based source.

“If you go to a busy court, you are more likely to be put on a list and get your bankruptcy through than not. In the county courts they don’t even see the debtor, they just see the paperwork.”

Some English insolvency experts bridle at charges that the laws they used are “soft” compared to the Irish ones, believing that Ireland’s rules are ancient and “unsophisticated”.

In addition, they argue that Ireland’s bankruptcy laws – where individuals can be hobbled for up to 12 years, though more likely between five to seven – are about little more than punishment.

In England and Wales, a bankrupt can be discharged and left free to trade again in a year, assuming that he has not played fast and loose with registrar-appointed official receivers.

Offenders guilty of trying to hide assets can be seriously punished, with the receivers able to go back to court to seek an extension of the bankruptcy order for up to 15 years.

“Fifteen years would be very rare, but I have received orders for eight and 10 years,” said one highly regarded receiver, Neil Hickling of Smith Williamson.

“If they co-operate fully and have nothing hidden away and if the creditors are happy, I don’t see any problem about one year,” he said.

“I have done search and seizures and gone in at six o’clock in the morning, so there is no doubt but that we have the powers necessary.”

So far, no high-profile Irish figure has had a bankruptcy order extended because of a lack of co-operation, but a number of cases are in the works, legal sources in London say.

Brittain of Deloitte agrees: “In many ways you end up with a more robust process than you have in Ireland because it is dealt with by private trustees rather than a government department.

“You have to go after the assets to get paid. It may be easy initially to get the order and to get the relief but it is a harder process to deal with once it happens,” she says.

She argues that problems in dealing with Irish bankrupts lie not with faults in UK laws, but rather because trustees do not get co-operation from across the Irish Sea.

“While we can get recognition in the Irish courts, getting support for the enforcement of those orders which we automatically get in the UK is much more difficult in Ireland.

“If I write to a firm of solicitors here and say, under the provisions of the Insolvency Act, deliver up your files about X, they do that because there is tried and tested case law that they have to.

“We have cases in Ireland where we write to solicitors in Ireland and say, ‘Can we have your files?’ They write back and they simply say No,” she says.

She is taking the first case in Ireland to get a court order forcing disclosure. “Mainly solicitors and accountants are the problem. The banks are better, to be fair,” she says.

Simeon Gilchrist, a barrister who is representing solicitor Brian O’Donnell in his bankruptcy application, points out that the Irish courts will first have to decide whether such co-operation from Irish legal and accounting firms complies with Irish law.

Some Irish make the mistake of believing that the first step – the declaration of bankruptcy – is the end of the matter, says another insolvency expert, Heath Sinclair of Mazars.

“The location of the court where they go for bankruptcy is irrelevant, because the trustee is appointed by the creditors and the trustee will go after the money,” he says.

Up to now, Irish banks have looked at questioning a bankruptcy applicant’s bid to establish their centre of main interest in the UK, but they are increasingly turning towards the next stage.

“The issue is whether the guy has any money, or whether he has some hidden away. If he hasn’t, there is no point going after him because that’s like the debtor’s prison of a few centuries ago,” says Sinclair.

Investigations in search of hidden assets, however, cost money: “So far the banks are prepared to pay for the provisional investigation stuff to see if there is anything worthwhile,” he added.

Steven Law, who chairs the insolvency trade body R3’s policy groups, says he senses that many in England believe their bankruptcy laws are being abused by “reckless spenders and bankruptcy tourists”.

Even without the Irish involvement, public opinion in the UK is changing towards its one-year rule, with an increasing number believing that the threshold is too low, particularly for those whose “debts accrued through reckless spending”, he said.

There are rumours among insolvency practitioners that the chief registrar, Baister, wants to tighten the rules for Irish claimants appearing before smaller courts.

If he does act, then registrars in places such as Macclesfield would begin to follow rules now imposed in Belfast after the Seán Quinn case, where applications from the Republic are rigorously tested. There, evidence of an applicant’s centre of main interest is probed, while cases are adjourned where there is doubt, to allow time for creditors in the Republic to be notified.

However, if the right of centre of main interest is established, creditors do not have to be told until after a bankruptcy declaration is awarded, says Deloitte’s Brittain.

Each year up to 30,000 English and Welsh file for bankruptcy, or are bankrupted after a creditor’s petition, but the majority seeking relief from debts choose another route. This is the Insolvency Voluntary Agreement (IVA), where a debtor reaches a legally binding contract with creditors on what he or she can afford to pay. Once that sum is paid, the rest is written off. Nearly 50,000 people used this process last year. In 2002, just 6,000 did so; IVAs were used more often than bankruptcy for the first time in 2010.

Those covered by IVAs are not barred from being company directors – as bankrupts are – nor do they lose all of their assets, but they “must have something to bring to the table”, says one expert.

However, there is a catch. Debtors must get the agreement of 75 per cent of their creditors who turn up at a creditors’ meeting. Frequently, few of them turn up.

The IVA route is not open to property developers linked unwillingly to the National Asset Management Agency, since it has decided to oppose all IVA applications.

“They have decided that they cannot, or should not, vote in favour of such a creditors’ resolution, believing that it would be politically unacceptable at home,” one legal source said.

One Irish firm allegedly offers a ‘one-stop shop’ where phones and debit cards are given to Liverpudlians to lay down a trail for someone who never left Ireland