Bankruptcy

Question 1

What legislation governs bankruptcy

Answer 1

The insolvency rules 2016

Question 2

Who is appointed once bankruptcy order made

Answer 2

Official receiver to look after estate ( almost all their possessions and assets)

Question 3

What happens if the bankrupt tries to make a disposition after the order or pay someone else

Answer 3

Disposition will be void and payee will have no legal title so holds for estate

Question 4

What is the role of the official receiver

Answer 4

To protect the estate until the appointment of the trustee in bankruptcy

Question 5

Who will be the trustee

Answer 5

A qualified insolvency practitioner

Question 6

What is the role of the trustee

Answer 6

To distribute the estate in accordance with the provisions of the insolvency act 1986 . Trustee has wide powers to declare void transactions and recover property for creditors

Trustee is also an insolvency practitioner

Question 7

What is the effect of being bankrupt

Answer 7

Lose the ability to deal with much of the property.

Trustee becomes legal owner of estate except items needed to continue employment and items for their families domestic comfort

Question 8

Can a court stay other legal proceeding if the person bankrupt

Answer 8

Yes

Question 9

What is a floating charge

Answer 9

Charge over the debtors assets

When it crystallises it will attach to specific asset

Question 10

What happens if 2 creditors secured by same asset

Answer 10

Depends on date of perfection ie registered

First to receipted gets first bite of cherry

Question 11

The priority list :
The order that debts are satisfied

Answer 11

1) costs incurred by trustee from realisation of secured creditors security

2) debts owed to secured creditors

3) costs occasioned by the bankruptcy in strict priority

4) debts owed to priority unsecured creditors :

Unpaid contributions to occupational pension schemes;

Remuneration owed to past and current employees ;

Sums due for coal and steel production under ECSC Treaty

5) debts owed to unsecured creditors

Question 12

What is a discharge from bankruptcy

Answer 12

Occurs automatically at end of 1 year after the order is made

Upon discharge remaining debts are discharged

Question 13

What is an individual voluntary agreement

Answer 13

It’s an agreement between the debtor and the creditors to discharge liabilities

Eg debtor says for very £1 owed creditors get 68 pence which is often more than they would get from the bankruptcy

Creditors meeting will be called and even creditors that do not vote will be bound by it

Question 14

Who can bring a bankruptcy petition

Answer 14

Creditor or the debtor themselves

Question 15

Can a creditor bring the petition if debtor owes them less than £5000

Answer 15

No

Question 15

What are the 3 grounds a petition can be brought under

Answer 15

The debtor has not complied with statutory demand and the time allowed for compliance (21 days ) or application to set aside (18 days) has expired

The debt is payable under a judgment, and execution or other process has been issued to enforce that judgment but has been returned unsatisfied. This is often reffered To as nil return and may be a writ or warrant of execution

An individual involuntary agreement has been made and debtor has failed to adhere

Question 16

What is certificate of continuing debt

Answer 16

Statement signed by petitioning creditor or rep which confirms debt is still due and owing

Need a fresh one for every adjourned hearing

Question 17

What is a statutory demand

Answer 17

Creditor serves demand detailing the debt with a statement

Statutory demand must be satisfied within 21 days of service

Question 18

Must the debt be unsecured if creditor filing

Answer 18

Yes

Question 19

How do you serve statutory demand

Answer 19

Personal service should be affected if practicable

If the creditor has done all that is reasonable and has been unable to personally serve then can use substituted method

Question 20

Must you get a court order to rely on substituted service

Answer 20

Yessss

Question 21

How does debtor challenge a statutory demand

Answer 21

May make application to set aside the statutory demand together with witness statement within 18 days of service of the demand

Question 22

How do you succeed in setting aside statutory demand - 4 grounds

Answer 22

Need to show there is a genuine triable issue

1) Debtor appears to have counter claim, set off or cross demand that equals or exceeds the debt

2) the debt is disputed on grounds that appear to the court to be substantial

3) appears that the creditor held some security in relation to the debt claimed and either rule 10.1(9) is not complied with in relation to it, the court is satisfied that the value of the security equals or exceeds the debt ; or

4) the Court is satisfied on other grounds that the statutory demand ought to be set aside

Question 23

Can the debtor seek and an extension of time to have the demand set aside

Answer 23

Yes and an injunction if necessary to prevent petition

Question 24

What needs to be lodged at court by the creditors solicitors on presentation of the petition

Answer 24

The petition, together with 2 copies of, and a further copy of it is based on default on an approved voluntary agreement ; If the petition is based on non compliance with statutory demand , a certificate proving service of the demand (to which a copy of the statutory demand should be exhibited) A statement of truth verifying the petition The court fee A receipt for the deposit payable in respect of the official receivers fee

Question 25

How many days before hearing must service of petition take place

Answer 25

14 days

Question 26

If court allows substitutes service for petition , court will usually apply a deemed date of service which is usually …

Answer 26

7 days later , therefore would need to be served 21 days before

Question 27

What is the list of creditors

Answer 27

Produce list of any creditors that Have given notice that they intend to appear for each hearing , accompanied by indication of whether they intend to support or oppose petition If none still need to provide

Question 28

Can court dismiss the petition if offer fi pay all debts is unreasonably refused

Answer 28

Yes

Question 29

Is the creditor entitled to claim costs incurred in presenting the petition if order made

Answer 29

Yes , usually don’t ask for anything at hearing but if just then costs in the bankruptcy

Question 30

If the hearing is adjourned what costs order

Answer 30

Costs in the petition as silent as to costs , in absence of contract means both parties would pay their own at the end of the

Question 31

If petition withdrawn or dismissed then what ?

Answer 31

Summary assessed , detail assesssed

Question 32

In bankruptcy annulment hearing , there are 2 grounds which debtor can seek to have order set aside

Answer 32

1) on the grounds existing at the time the order was made, the order ought not to have been made 2) to the extend required by the rules the bankruptcy debts have been paid or secured to the satisfaction of the court