Our bankruptcy annulment team is made of highly experienced and tough negotiators that will fight to get the best results for our clients. We have years of experience of negotiating with creditors and debtors alike from large multi-million pound cases to smaller matters with equally large consequences for the person involved.
The creditor lent money to two debtors who allegedly did not comply with the terms of a loan agreement.
The creditor served a statutory demand on both creditors for the alleged debt, however the debtors did not respond to the statutory demand.
(NOTE: it is advisable that as soon as a statutory demand is received to seek legal representation because a debtor who inexcusably does not challenge a statutory demand and/or bankruptcy petition has a significant risk that the annulment application will be refused as (even when the grounds to annul exist) it is totally in the court’s discretion whether to grant an annulment or not).
2 months after the service of the statutory demands, the creditor issued a bankruptcy petition against one of the debtors. The debtor did not respond to the bankruptcy petition.
One debtor applied to set aside the statutory demand and the other applied to annul the bankruptcy by arguing that the loan agreement was unenforceable as some provisions were not in compliance with the Consumer Credit Act 1974.
The Court Judgment: Successful Annulment of the Bankruptcy
The Court found in favour of the debtors and the test applied for the successful annulment was that the Court was satisfied that there was indeed a genuine triable issue on whether the debt existed or not (given the potential unenforceable loan agreement on which the debt derived from).
This case has set a precedent for the determination of future annulment cases as the Court decided that in an annulment application, an applicant need not pass a more stringent test than for challenging a statutory demand debt.
Do I have a case to annul my bankruptcy order? Incorrect judgment in default? Debt genuinely disputed? Abuse of process? False statements lead to bankruptcy order? Debt already paid? Security provided in satisfaction of the debt? IVA already agreed?
There are 3 principal grounds on which the Court has the discretion to annul a bankruptcy order and many examples of the Court accepting applications to cancel a bankruptcy:
1. The bankruptcy order ought not have been made at the time
- a bankruptcy petition was procedurally incorrect;
- evidence has come to light which was not available at the time the bankruptcy order was made, for example an explanation why the debtor could not attend the bankruptcy hearing in the first place (Hope v Premierpace (Europe));
- the bankruptcy petition was based on an incorrectly obtained judgement in default (Royal Bank of Scotland v Farley)- see our case study on an annulment of a bankruptcy order for a successful example of this in practice;
- a bankruptcy order was incorrectly made on the basis of a subsequently set aside council tax liability order;
- a bankruptcy order ought not have been made as the debt was genuinely disputed (Guinan III v Caldwell Associates);
- a bankruptcy order ought not have been made as the debt was not due and the debtor did not owe the “creditor” any sums to begin with (Flett v Revenue and Customs Comrs);
- there has been an abuse of process where bankruptcy proceedings have been initiated to frustrate another process for example where the debtor was not insolvent to begin with;
- if false statements were made which led to the court making the bankruptcy order, in one case where the bankrupt (on their own petition) was in fact solvent (F v F (Divorce: Annulment of Bankruptcy Order)); and
- if a bankruptcy order was made when the debtor’s centre of main interests was not in England and Wales and therefore the UK court has to annul as it has no discretion (Deutsche Apotheker-Und Arztebank EG v Leitzbach).
2. the bankruptcy debts have been paid
- for example, a case where the debts which have been proved have already been paid in full by the debtor;
- if a creditor that is owed funds by the debtor cannot be traced, then an annulment could be secured by seeking an order from the court that the debtor can provide security to pay to the creditor if the creditor can be tracked down; and
- we have successfully provided solicitors’ undertakings to the court as security, which in those cases were accepted by the court and the bankruptcies annulled (IRC v Khan).
3. if an undischarged bankrupt enters into an IVA with their creditors
Get your Bankruptcy Cancelled: Instruct Specialist Bankruptcy Annulment Solicitors
We are a specialist City of London law firm made up of Solicitors & Barristers operating from the only law firm based in the Middle Temple Inns of Court adjacent to the Royal Courts of Justice. Generally many solicitors are unfamiliar with the Insolvency Rules and the minutiae of the bankruptcy process, we are experts in dealing with matters surrounding individual insolvency.
Our team have unparalleled experience at cancelling bankruptcy orders, liaising with the Official Receiver, providing a solicitor’s undertaking, representing you at any bankruptcy hearing at the Bankruptcy Court, at the Royal Courts of Justice (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules.