Unsuccessful challenge to recognition of foreign bankruptcy

The High Court has dismissed an application to set aside recognition of a Danish bankruptcy under the Cross-Border Insolvency Regulations 2006 (CBIR). 

Mr Shahzad was declared bankrupt in Denmark in December 2022. The Danish trustee sought and obtained recognition of the bankruptcy in England as a foreign main proceeding. Mr Shahzad later applied to set aside that recognition, arguing it offended English public policy because it effectively enforced Danish tax liabilities.

The key issue was whether recognition should be refused under Article 6 CBIR (public policy exception) on the basis that the insolvency proceedings were, in substance, an attempt to enforce foreign revenue laws.

The court rejected the challenge. It confirmed that the public policy exception is narrow and found no evidence that recognition would amount to direct or indirect enforcement of Danish tax claims. 

The Danish bankruptcy was clearly a collective insolvency proceeding, meeting the requirements for recognition under Article 17 CBIR. The presence of multiple creditors was decisive: the Danish tax authority held less than 10% of claims and was not the sole or controlling creditor. Allegations that the trustee was effectively acting for the tax authority were unsupported by evidence. Authorities relied upon by Mr Shahzad were distinguishable, as those cases involved situations where tax recovery was the sole or dominant objective.

The decision confirms that the CBIR public policy exception will be applied restrictively. Recognition will not be refused merely because a foreign tax authority is a creditor. A challenge based on “disguised tax enforcement” requires clear evidence that the insolvency is effectively for the sole benefit of the revenue authority.

The judgment reinforces the English courts’ pro-recognition stance in cross-border insolvency.

Shahzad v Bramhelft [2026] EWHC 1039 (Ch)

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