Ms Halabi applied to annul her bankruptcy order, made for non payment of her rates. She applied within approximately 6 months of her adjudication. Her bankrupt estate was solvent but illiquid. She had not previously appreciated that she had sufficient equity in her property (over andpound;70k) to borrow sufficient to discharge her debt.
Held: The bankruptcy was annulled.
John Jarvis QC said: ‘In this case I consider this is a proper case in which to exercise the discretion to annul the bankruptcy. Of course, annulment is not a matter of right for a bankrupt and it is a matter of discretion. Some of the Registrars have described it as a privilege. That probably is not the best language to use. It is perhaps best described as an indulgence which the court grants to a bankrupt in these circumstances. The factors that the court will take into account in exercising its discretion must embrace whether there is a public interest in allowing annulment. The mere fact that the creditors are content that annulment should take place is never in itself sufficient. If there are cases where there has been gross mismanagement or misconduct, it may be an inappropriate case to grant annulment. The reason for this is that the message which is sent out by the court in annulling a bankruptcy is that there is nothing wrong in the bankrupt’s conduct. The court must always be mindful of that.’
However, the order was not to take effect until the Official Receiver notified the Court that the bankruptcy debt, (and statutory interest on it) was paid. The court did not have jurisdiction to accept the bankrupt’s solicitor’s undertaking for this purpose (as had become practice in some lower courts). Section 282 was explicit; the bankruptcy debts and expenses must have been paid or secured in full before an annulment can be granted: ‘the meaning of ‘paid’ within the context of section 282(1)(b) does not equate to ‘secured by an undertaking’, and further added, ‘the two are simply quite different concepts’.
Judges:
John Jarvis QC
Citations:
[2008] BPIR 370, Times 05-Mar-2008, [2008] EWHC 322 (Ch)
Statutes:
Insolvency Act 1986 282(1)(b), Civil Procedure Rules 40.7, Insolvency Rules 1986 6.211(2)
Jurisdiction:
England and Wales
Citing:
Cited – Peri v Engel ChD 29-Apr-2002
A third party agreed to pay the bankrupt’s debts. He applied for the bankruptcy to be annulled, and for the trustee’s costs to be assessed and fixed at a reasonable level under section 303. The trustee appealed the costs order saying that the . .
Lists of cited by and citing cases may be incomplete.
Insolvency
Updated: 02 June 2022; Ref: scu.464383