Can bankruptcy result in refusal of naturalisation application

Bankruptcy is a serious matter and in certain circumstances may impact applicant’s Naturalisation application. Being declared bankrupt can jeopardise your Naturalisation application due to Home Office ‘good character’ requirement. Nevertheless, bankruptcy in itself does not mean that the application has to be refused on all occasions. Home Office guidance on this matter is quite extensive. The bankruptcy in British citizenship applications is part of applicant’s financial soundness assessment.

Do I need to worrry about bankruptcy or liquidation proceedings for my naturalisation application? Rule of thumb.

Bankruptcy discharged more than 10 years ago                               This image has an empty alt attribute; its file name is image-1.png
Bankruptcy order has been annuled                              This image has an empty alt attribute; its file name is image-1.png 
The applicant has been declared bankrupt abroad                               This image has an empty alt attribute; its file name is image-1.png
The applicant was involved with a company that has been liquidated more than 10 years ago                                This image has an empty alt attribute; its file name is image-1.png 
Bankruptcy was declared less than 10 years ago      This image has an empty alt attribute; its file name is image-2.png    

Nationality: good character requirement

Bankruptcy order can be made against an individual or an entity that is unable to pay its debt. 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.

Being declared bankrupt does not mean our naturalisation application is doomed to fail. However, it makes the matters much more complicated and usually, we would recommend asking for professional advice before submitting the application.

Home Office caseworker assessing Naturalisation application should make enquiries as to whether before or during the bankruptcy proceedings, the applicant has been involved in one of the following activities:

  • concealment of assets
  • concealment or destruction of relevant financial documents
  • fraudulent claims
  • false statements or declarations

If the Home Office is persuaded that one or more of the above have taken place, your application for British citizenship is likely to be refused.

Company Liquidation

Besides bankruptcy, applicants for Naturalisation can have in their personal history other situations that are of interest to Home Office. One of them is being a director or other officer of a company that went through a bankruptcy or liquidation, or any type of voluntary or involuntary arrangements.

bankruptcy liquidation of a company naturalisation as a british citizen

Company can be “wound up” (i.e. liquidated) as not being able to continue as a going concern. Alternatively, it may enter in many types of 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:
  • survive, in whole or in part, as an ongoing business
  • organise a voluntary arrangement or compromise with its creditors
  • get a better realisation of assets than would be possible if the company went into liquidation

Financial soundness

Financial soundness is an important part of the good character assessment during Naturalisation application. Bankruptcy, or being involved with a liquidated company, is a serious mater and will be treated as such by the Home Office caseworker. When an applicant for British citizenship has been involved with either a bankruptcy or liquidation of a company, the circumstances surrounding that event will be scrutinised.

The caseworker will look at:

  • the scale of the bankruptcy or liquidation
  • and the economic circumstances at the time of application when looking at any mitigating circumstances
  • will make a judgement about how culpable the person was in either becoming bankrupt or their involvement in the company that went into liquidation.

On the outcome of the assessment will depend the success of the application. In such circumstances the role of the cover letter, explaining to the Home Office the circumstances of the bankruptcy or liquidation will be crucial. It is crucial to explain fully and truthfully the events around bankruptcy. We can help with that task. We can write comprehensive and professional cover letter which will improve chances of a success with naturalisation application. Follow this link for our bespoke cover letter writing service.

Home Office considerations in financial soundness analysis

When a caseworker deals with matters of bankruptcy or company liquidation, he will be concerned with establishing and assessing certain facts related to those events. The most important will be the conduct of the applicant in those proceedings. Also, the conduct of the applicant in the time leading to those events.

What the caseworker will be looking for are reckless or irresponsible conduct in the financial affairs leading to their bankruptcy or the company’s liquidation.

Disqualification order

One of the most important indicators for the Home Office during the good character assessment for Naturalisation application will be a disqualification order. If such order has been issued by the court during the liquidation procedure the application for British citizenship will be refused on the good character grounds, The list of all disqualifications is accessible on the Companies House website.

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.

The above extract from the Home Office guidance gives Home Office caseworker who is assessing applications for UK citizenship a large margin of discretion in considering applicant’s good character. For this reason a good cover letter with a clear, honest and believable explanation of the circumstances leading to bankruptcy/liquidation, can help you succeed in your Naturalisation application.