First use of legislation enacting cross-border insolvency rules shows you can run but not hide: a Lloyd’s name bankrupted in England has been traced to New Zealand with gold bullion and foreign currency valued in excess of two million dollars seized to pay his creditors.
The High Court was told that London psychiatrist, Alan Geraint Simpson, was forced into bankruptcy in England over his failure to pay a debt plus accrued interest of some £242,000. This followed losses on insurance underwriting. So-called “names” at Lloyd’s form part of underwriting syndicates that act like insurance companies. Individual names can be personally liable for insurance losses.
Evidence was given that Mr Simpson claimed after his bankruptcy to have no personal assets of any significance and said he was being provided with a car and house in Hamilton by a trust called the BV Adams Trust. He was proving evasive, giving as his UK contact address a Citizens Advice Bureau in Hertfordshire.
UK authorities suspected he was hiding substantial assets in New Zealand. In particular, there were rumours that Mr Simpson was heavily involved in speculative bullion trading.
Using the Insolvency (Cross-border) Act 2006, UK authorities asked for a court order to search Mr Simpson’s Hamilton residence.
The 2006 Act puts into New Zealand law an international treaty designed to assist the cross-border pursuit of assets held by bankrupt individuals: a United Nations-brokered Model Law on Cross-border Insolvency.
The High Court issued a search warrant under strict terms: officers of the New Zealand insolvency service were authorised to enter Mr Simpson’s residence, in the presence of a police officer, to search for and seize any gold bullion or precious metals found there, with the process to be videotaped in its entirety.
Their subsequent report to the court disclosed safes and secret compartments holding bullion and foreign currency valued at over two million dollars. On the court’s order, these liquid assets are being held in safekeeping at the Westpac Bank in Auckland.
Subsequent to the search and seizure, the High Court instructed the New Zealand insolvency service to act as if Mr Simpson had been bankrupted in New Zealand, in particular to establish the extent of his assets and liabilities in New Zealand. Inland Revenue in particular is expected to have an interest in any taxable profits made by Mr Simpson.
Once the extent of New Zealand creditors has been determined, the High Court will be asked to rule on the distribution of the assets held by Westpac.
Williams v. Simpson – High Court (17.09.10 & 12.10.10)
10.10.001