The recent bankruptcy case of Boris Becker was one of the most high-profile in recent memory. Following a saga stretching back five years, the former tennis ace was jailed in April for offences relating to the non-disclosure of assets.
So what exactly did the German ex-Wimbledon champion do to fall foul of the law? And what are the rules on disclosing assets if you file for bankruptcy?
Becker was declared bankrupt in June 2017 with close to £50m in outstanding debts. The final straw was a £3m loan he took out on a luxury property in Mallorca which he subsequently failed to keep up with the repayments on.
There’s no criminal offence in that, of course. But it was later alleged that Becker hadn’t revealed all of his financial assets at the time of his bankruptcy.
After a trial at Southwark Crown Court, a jury ruled that that was indeed the case. He was convicted of moving close to £400,000 in cash from his bank accounts to those of family members and close friends, hiding a bank loan worth £700,000, and not declaring shares in a property and a technology business.
The 54-year-old was sentenced to two and a half years as a result.
What does the law say on treatment of assets in bankruptcy?
When you are declared bankrupt, you in effect forfeit control of your own assets. These go to an appointed trustee, whose role is then to sell them to raise funds to pay your creditors. There are exceptions to the assets that are forfeited as part of the bankruptcy procedure, including everyday household items and things you need for work.
But apart from that, you have a duty to declare all financial assets at the start of the bankruptcy process. This is so your appointed trustee can accurately calculate how much is available to distribute among creditors.
The disclosure of your assets is made to an official receiver, a qualified insolvency practitioner who is also connected to the courts (a bankruptcy order is made by a judge). The official receiver may become the trustee who handles your bankruptcy, or another insolvency practitioner can be appointed later.
Either way, your initial interview regarding the process will be with the official receiver. Here you’ll be asked to complete a questionnaire and submit paperwork detailing your assets. As per the terms of the Insolvency Act 1986, this must be a complete list covering property, shares and investments, loans, business interests and a full breakdown of current finances (e.g. funds held in bank accounts).
After initial disclosure, you are then obliged to tell your trustee of any significant changes in your financial circumstances (such as a rise in salary) for the duration of the bankruptcy. You must also declare that you are bankrupt when seeking any loan over £500.