Former Wimbledon champion Becker was made bankrupt in June, and will be until he is automatically discharged on 21 June 2018.

An insolvency offences prosecutor described Boris Becker’s bankruptcy suit as a “unique situation” as he shed light on how tax avoidance has recently been a key factor in high net worth bankruptcy cases.

Tennis legend and former Wimbledon champion Becker was declared bankrupt in late June by the High Court of Justice in London after an application was made by Arbuthnot Latham, the UK private bank, in connection with a debt of around £3 million ($3.9 million) owed to the firm for nearly two years.

Becker, who was not at the hearing in late June, was told by registrar Christine Derrett that “with regret” he could not pay the debt and therefore had to be declared bankrupt.  His representatives had asked for a final chance to pay using funds from re-mortgaging a property in Majorca, but they were denied a 28-day extension, which his lawyers said would be enough time to pay the debt.

But Cameron Brown, a lawyer from Foundry Chambers who prosecutes on insolvency offences, has said that Becker’s case is quite rare among high net worth individuals.

“I think the Boris Becker case is something of a unique situation,” said Brown. “As I understand it, [Arbuthnot Latham] felt they had given sufficient opportunity for him to come through on the debt, and they were not prepared to wait any longer and went ahead with bankruptcy proceedings.”

Brown also spoke about why Becker’s plea to re-mortgage his Spanish home to pay off the debt was turned down.

“I suspect because this situation has been going on for a while, they were not satisfied that the property was going to give them the money,” Brown added. “That is what normally happens in these situations. The courts are normally reluctant when they have given many opportunities before it, and decided not to give him the extra time.”

In a statement, Becker said: "This order relates to one disputed loan which I was due to repay in full in one month's time. It is disappointing that my request for today's hearing to be postponed until this time was refused. My earnings are well publicised and it is clear that I have the means to repay this debt. The value of the asset in question far exceeds the debt owed to Arbuthnot Latham."

The German-born star will be bankrupt until he is automatically discharged on 21 June 2018.

Arbuthnot Latham told this publication, it was “not commenting on the story as it does not comment on individual client cases”.

Tax avoidance

Brown went on to explain that in common bankruptcy suits involving high net individuals, tax avoidance has become the most common case.

“I think recently, there have been a lot of cases where high net worth individuals have been engaging in these tax schemes,” Brown said. “They become involved in these tax schemes, which they are advised to do as a way of reducing their tax liabilities. HMRC look into it and three and four years later, they make a decision that it is effectively a tax avoidance scheme. Then the person does not have the money to satisfy the original tax liability because the money has been spent. And then they impose accumulative penalties, and in those circumstances, they then apply or are made bankrupt.”

Terms of bankruptcy

Bankruptcy can be filed both voluntarily or involuntarily by creditors. Normally you would go to either the County Court or the High Court, depending on a valuation of the bankruptcy. Effectively, if you don’t have enough assets to clear your debts, you are declared bankrupt. In normal circumstances, that lasts for a period of a year.  
 
This means you are effectively protected from creditors during that period, and consequently from them petitioning you, and this allows you to work out what you can pay, and then your debts are written off.

According to the Insolvency Service website, when you are bankrupt, it means you cannot:
-- Borrow more than £500 without telling the lender you’re bankrupt
-- Act as a director of a company without the court’s permission
-- Create, manage or promote a company without the court’s permission
-- Manage a business with a different name without telling people you do business with that you’re bankrupt
-- Work as an insolvency practitioner (an authorised debt specialist).

Brown added: “Being declared bankrupt is a significant step, and I think some people feel it does not matter that much but it does have various repercussions. The idea is they don’t want people running around who cannot sort out their own finances running companies.”