Preliminary note in relation to annulment of bankruptcy orders
This is a preliminary advice note
and is no substitute for the taking of detailed legal advice in what may relate
to potentially a very complex legal position.
We would at first note that it is
not uncommon for bankruptcy orders to be made against individuals without their
Common situations include where
the creditor obtains an order for substituted service at an address at which
the individual no longer lives – but service at which address becomes legally
effective. Further, writing letters to
the Court explaining why a person cannot attend a bankruptcy hearing are almost
invariably ignored by the Court and bankruptcy orders are often made in such
Bankruptcy has an extremely
unfortunate consequence of affecting the worldwide assets of a person.
Also the fact that the amount
claimed is only modest does not preclude the making of a bankruptcy order (as
long as the amount claimed is in excess of the bankruptcy limit currently £750),
and the order will affect the whole of the worldwide assets of the individual.
Accordingly if the bankruptcy order is only for £1500 council tax and a person’s
assets are several million pounds, the bankruptcy will still result in the
whole of the individual’s assets vesting
initially into the Official Receiver and subsequently into the name of any
appointed private Trustee in Bankruptcy.
An application can be made to
annul a bankruptcy order. If such order is made, the individual is deemed to
never have been bankrupted.
There are two grounds to annul a
The first ground is that the bankruptcy
order ought not to be made. This is a fairly
difficult ground to satisfy.
It is not uncommon for bankruptcy
to be pursued following a judgment entered in default in the County Court. The Bankruptcy
Judge will not normally go behind such judgment. In such case if it wished to
contest the bankruptcy, it will be also necessary to apply to set aside the
judgment in the County Court.
The second most common ground to
secure a bankruptcy annulment order is upon the basis of payment in full of
bankruptcy debts and expenses in full.
If a private trustee has been
appointed then this will be considerably increase the amount of the bankruptcy
expenses. The fees of the Official Receiver, who is initially appointed, will
usually be relatively modest by comparison.
As a person has been adjudicated
bankrupt, they are not able to raise money upon their assets (which will
following the making of the bankruptcy order be vested in the Official
Accordingly if this ground is to
be relied upon money will need to be raised from family, third parties or by
way of bankruptcy annulment funding.
This is a specialist form of funding- in essence in the form of bridging
Once an application has been
submitted to the Court for the annulment of the bankruptcy order it is
generally the case that the Official Receiver does not take steps for the
appointment of a private trustee in bankruptcy and therefore this will give
rise to significant saving in bankruptcy expenses.
Bankruptcy represents a core area
of the work of this firm.
We offer an initial fixed fee
interview of half an hour at a cost of £75 plus VAT. We are pleased to undertake this by way of a
telephone conference is this should be more convenient.
If you would wish this firm to
assist please contact Lawrence Rodkin (partner).