Individual aware of own insolvency & requests County Court to make bankruptcy order
Payment of requisite fee
Individual to compile statement of affairs ~ Statement must show full assets & liabilities
Individual attends before District Judge who will make Bankruptcy Order
Court will then inform Official Receiver & send him copies of statement of affairs
Debtor must satisfy court that he is insolvent
The Court can issue Certificate of Summary Administration where unsecured debts total less that £20000 & there is no previous bankruptcy or arrangement with creditors in the last 5 years
It can refer matter to an Insolvency Practitioner to investigate whether IVA possible if no previous insolvency in last 5 years & at least £2000 assets in value
County Courts Act 1984
Normally based on either a judgement debt (County Court) or an undisputed debt
Creditor issues Statutory Demand
It is a formal demand for payment to ensure debt is not disputed. If disputed & challenged debtor may have demand set aside & incur costs
The minimum debt for a creditors petition is £5000 (This is effective from 1st October 2015 - prior to that the limit was £750. Please note that a debtors petition remains at £750). Several creditors may join together to achieve the level this is called a joint petition
If demand not paid within 21 days creditor may file a bankruptcy petition with the court
The date is then fixed with court for hearing of petition and the District Judge will make decision as to suitability of Bankruptcy Order - if no possibility of debt being settled
The debtor will be given opportunity to defend against order being granted
The court will not make an order if debtor has made an offer to the Creditor and it has been 'unreasonably refused'. Creditor must have 'cut & dried ' case & present court with clear evidence that debt is due & unpaid
The Court may give debtor extra time to pay , seek advice or prove that debt is not owed
Where bankruptcy order is made on a creditors or debtors petition - bankruptcy date is the date that the order is passed
Official Receiver is appointed TRUSTEE IN BANKRUPTCY in the first instance.
The Official Receiver is a person appointed to act in relation to personal & company insolvency
He/ She is a Civil Servant controlled by Secretary of State for the Department of Trade & Industry and attached to High Court or various County Courts and is an Officer of the Court
The OR is a 'Next Step Agency' ~ The Insolvency Service
Will act as Trustee unless an Insolvency Practitioner is appointed. Normally only done where assets have to be realised
Official Receivers main duties are to investigate debtors financial affairs for period immediately prior to bankruptcy. He has to report to both Court & Creditors
The report to creditors is known as Official receiver's observations.
Also reports any matters which indicate debtor has committed criminal offence in connection with bankruptcy.
The Official Receiver will advise debtor of restrictions placed upon him including obtaining credit in excess of £250 without disclosing bankruptcy,carrying on business directly or indirectly in a different name or be concerned with running or managing a Co without the courts permission and holding certain public offices
LA should have received notification of bankruptcy from OR. Often does not happen?
debtor fails to disclose LA as creditor so OR does not know of debt
debtor may have moved several times and only declares last one
In most cases no creditors meeting is held ~ No meeting called where assets are approximately £2000 or less
If no meeting LA should receive notice from OR stating such and should also look to receive
Copy of ORs observations
Proof of debt form
Complete proof of debt form
Return to OR
Statement of claim up to Bankruptcy Order date
Bankruptcy date should be stated on form
Debts incurred after that date should be pursued through debtor
Consider any joint and several liability
To appoint licensed insolvency practitioner as Trustee in bankruptcy in place of OR
or
To give creditors chance to form creditors committee
It is normally held at ORs office or hotel
Made up of 3 - 5 creditors, Volunteers ~ Assist trustee in bankruptcy ~ Rare in bankruptcy - usually where debtor involved in specialist business
Trustee in Bankruptcy appointed by majority of creditors present at the meeting
As a creditor LA should receive
Notice of creditors meeting
Copy of OR report
Proof of debt form
Proxy form
1. Complete proof of debt form
2. Complete proxy form if required & return to OR
Allows you to attend meeting or be represented at meeting and vote for Insolvency Practitioner of your choice
If you do not wish to attend proxy may allow OR to vote in your absence
LAs often appoint recognised firms to act as proxy - free of charge
1. To realise assets in bankrupts estate
2. Agree creditors claims
3. Distribute funds by way of dividend
interim
final
4. Call final meeting to provide creditors with an account & report of administration of estate
LAs should ideally keep in touch with Trustee
The LAs debt frozen at date of the Bankruptcy Order and should be claimed in line with Kaye v South Oxfordshire & Certain Exhibitions Limited
Any debt due after that date is due in the normal way certain exemptions apply to NNDR & Council Tax as far as trustee is concerned
Trustee not normally liable for charges. Write Off procedure will come into play ~ Payments subsequently made can be written back
Bankrupt automatically discharged after 3 years unless debtor has been bankrupted before in the last 15 years
Where court issues Certificate of Summary Administration , Trustee does not have to investigate all bankrupts affairs & he may be released after 2 years
Where court refers matters to an Insolvency Practitioner with a view to an Individual Voluntary Arrangement - full status reported to court
If viable court will make an interim order - No action can be taken by creditor before IVA created
Where IVA not viable - bankruptcy
