Review the following from the good character guidance
https://assets.publishing.service.gov.u ... racter.pdf
Financial soundness
This section explains the financial situations that can affect a person’s good
character and how to consider them when deciding an application.
Bankruptcy
Bankruptcy occurs when a person is unable to meet their debts and has had a
bankruptcy order made against them. A bankruptcy order can be made by a court
after a petition either by the individual (on a voluntary basis) or by a creditor or
creditors.
Fraud can occur during the bankruptcy process. This can take a number of forms but
may typically involve:
• concealment of assets
• concealment or destruction of relevant financial documents
• fraudulent claims
• false statements or declarations
Making false declarations on bankruptcy forms can constitute perjury.
Where there is information to suggest on the balance of probabilities that bankruptcy
fraud has taken place, the application will normally be refused.
For details of all un-discharged and recently discharged bankrupts search the
insolvency registers for:
• England and Wales
• Scotland
• Northern Ireland
Liquidation
Liquidation occurs when a company is ‘wound up’. There are also alternatives to
liquidation that may come up during the course of a citizenship application. These
include:
• informal arrangements - the company may have considered writing to all its
creditors to see if a mutually acceptable agreement can be reached
• company voluntary arrangement (CVA) - this is a formal version of the
arrangement described above: the directors would need to apply to the court with
the help of an authorised insolvency practitioner, who would supervise the
arrangement and pay the creditors in line with the accepted proposals
• administration - this is a court procedure that gives the company some breathing
space from any action by creditors: a court can grant an administration order to
enable the company to:
o survive, in whole or in part, as an ongoing business
o organise a voluntary arrangement or compromise with its creditors
o get a better realisation of assets than would be possible if the company went
into liquidation
Further information on liquidation can be found at GOV.UK.
Consideration of financial soundness
If a person states that they have been declared bankrupt or have been a director or
involved in the management of a company (either wholly or partly) that has gone into
liquidation, further enquiries must be made.
On receipt of information, an application can be granted where there is evidence
that:
• the bankruptcy order has been annulled
• the person was discharged at least 10 years ago
• the person was declared bankrupt abroad
• the person was involved with a company that was liquidated over 10 years ago
If the conditions above are not met but there is evidence that the person has been
bankrupt or been involved with a company that went into liquidation, you must:
• take account of the scale of the bankruptcy or liquidation
• take account of the economic circumstances at the time of application when
looking at any mitigating circumstances
• make a judgement about how culpable the person was in either becoming
bankrupt or their involvement in the company that went into liquidation
You must consider whether the person was reckless or irresponsible in their financial
affairs leading to their bankruptcy or their company’s liquidation. If so, it is likely to be
reflected by a disqualification order which prevents a person from being a director or
taking part in the management of a limited company for a period of up to 15 years.
Details of all disqualifications are on the Companies House website. Where a person
has a disqualification order, an application will normally be refused.
An application will also normally be refused where the person has deliberately relied
on a recession to avoid payment of taxes or payment to creditors.
However, where the person was made bankrupt or their company went into
liquidation through little or no fault of their own, the application will not normally be
refused. For example, they may have simply been a victim of the poor business
decisions of others or their business has been severely affected by an economic
downturn.
Debt
An application will not normally be refused simply because the person is in debt,
especially if loan repayments have been made as agreed or if acceptable efforts are
being made to pay off accumulated debts.
However, where a person deliberately and recklessly builds up debts and there is no
evidence of a serious intention to pay them off, the application will normally be
refused.
It may be helpful for you to consult a solicitor.
All advice comes from personal research and experience and should not be regarded as professional opinion.
