Case Study: Obtaining an annulment (in spite of last-minute creditors)

How did our client get made bankrupt?

Our client was made bankrupt when he failed to pay council tax. He didn’t obtain legal advice at the outset and without legal advice, he was unable to defend the petition which resulted in him being ordered bankrupt in 2018.

How did we apply to annul his bankruptcy?

The Insolvency Rules allow an application to be made to annul one’s bankruptcy on the following grounds:

  1. should not have been made bankrupt
  2. has obtained funds to pay all debts and expenses in bankruptcy.

Our client was fortunate to be able to raise the funds necessary to discharge all of the debts in his bankruptcy.

Events leading up to the annulment

We were instructed to prepare an application on his behalf which included submitting a witness statement and evidence of the third party funds he had obtained. This was shortly listed for a hearing.

A week before the hearing, all seemed to be in hand. Our client had raised over £50,000, which we held on account for him. On this basis, we were able to provide a solicitor’s undertaking in advance of the hearing which would satisfy the Court and the Official Receiver that we held the necessary funds. However it was not that simple…

Three days before the hearing, the Official Receiver notified us that HMRC had submitted a proof of debt for several thousand pounds. Our client had a couple of days to get these funds together.

We remind clients of their duty to inform the Official Receiver of all of their known or potential creditors however a creditor can provide a proof of debt at any time.

Fortunately, our client was able to raise the funds and we worked round the clock to liaise with the Official Receiver to ensure it was in possession of all of the information concerning the bankrupt’s debts and could provide an up to date report to us and the Court.

We were able to provide an undertaking pursuant to the Insolvency Rules.

We were successful in our application and the annulment was granted at the hearing much to our client’s delight who now get’s a fresh start.

What happened after the hearing?

Following the hearing we were able to distribute payments to our client’s creditors and write to his bank to unfreeze his bank accounts. We understand how important it is for our clients to get back to normal and start rebuilding so we prioritise their cases and regularly chase the court and the Official Receiver in order to bring our clients’ matters to a conclusion and achieve the desired outcomes for our clients.

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