A tactical bankruptcy?

Tommy Robinson, founder of the English Defence League was in court last week being pursued by the many people he owes money to. This has increased scrutiny on whether he genuinely disposed of assets in his timely divorce from Jenna Lennon.

Tommy filed for voluntary bankruptcy on 3 March 2021, shortly after finalising his divorce the month before. Libel proceedings pre-dating his bankruptcy had been brought against by him by a Syrian schoolboy. However they had not been determined in March 2021 and it was several months later (in July 2021) that Tommy was ordered to pay £100,000 plus substantial legal fees after unsuccessfully defending those proceedings. It is understood that he owes c£2,000,000 to his creditors.

As part of their divorce, the former spouses apparently agreed the division of their assets although agreed settlements would still be submitted to the court for judicial approval. It is reasonable to assume that a judge must have been satisfied that the agreement they reached was fair before making an order in those terms; family courts do not approve orders simply because a couple have agreed terms. The family home, a substantial property in Bedfordshire purchased for £705,000, was retained by Jenna Lennon, in the divorce settlement.

Creditors have instructed a Trustee in Bankruptcy to investigate the extent of Tommy’s assets. Specifically, they want to know whether assets have been deliberately hidden or improperly disposed of in the divorce with the intention of defeating their claims. When an individual is made bankrupt, certain transactions can potentially be challenged. Transactions where full value has not been paid could be vulnerable as could a transfer of assets that is considered to prefer one creditor over others.

Even though Robinson and Lennon have divorced and resolved their financial affairs between themselves, asset transfers between divorcing spouses can still be challenged after a court order has been made. However, realistically that challenge is only likely to succeed if there is evidence of fraud or collusion between them. That is presumably what Robinson’s creditors believe to be the case here – but a challenge will not be easy for them based on similar cases to date. Establishing whether assets were transferred at an undervalue may not be straightforward. Where compromises are reached to settle the financial aspects of a divorce, the fact that the parties have accepted an outcome in settlement of their claims, or in return for giving up certain claims, is also treated as valuable consideration.

Bankruptcies usually last for 12 months (but can be extended), meaning that Tommy Robinson’s Trustee in Bankruptcy has until 3 March this year to complete their preliminary investigations. It has been many years since the overlap of bankruptcy and divorce has been reviewed in depth. Many family and insolvency lawyers will therefore be keeping a watchful eye on the future development of this case. If you are concerned or need assistance with issues relating to bankruptcy in divorce, please do not hesitate to contact us.