Kerry Underwood

BANKRUPTCY SET ASIDE AS SERVING NO USEFUL PURPOSE

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In September and October I am delivering my new course – Getting the Retainer Right –  details and booking form here.

In Lock v Aylesbury Vale District Council [2018] EWHC 2015 (Ch) (9 July 2018)

the High Court set aside a bankruptcy order based on a petition re unpaid council tax on the basis that the debtor had no assets to satisfy her liability in bankruptcy and no investigation of her affairs would bring anything to light and so there was no point in making her bankrupt.

The debtor served evidence that she was living in social housing, was dependent on financial support from her daughter, and that as she had no assets there was no useful purpose in a bankruptcy order.

The District Judge made the bankruptcy order as there had been liability orders which had not been set aside or challenged.

The debtor appealed, relying on section 266(3) of the Insolvency Act 1986, which gives the court a general discretion to dismiss a petition.

The local authority had prepared a bankruptcy checklist, not in evidence before the District Judge who made the bankruptcy order, which showed it was aware before presentation of the petition that the debtor was unemployed, did not receive benefits nor own a home and noted that the case was an unusual one as there were no clear assets but that the debtor may have come into an inheritance, although there were no documents to support that belief.

It had not put those unusual circumstances before the court to enable the debtor to address them in evidence.

The debtor argued at the appeal that she had not received any inheritance nor was she likely to.

Where a bankruptcy petition was founded on unpaid council tax, there was a burden upon a public authority to show a prima facie case that a bankruptcy order would achieve some useful purpose.

The local authority should have put the unusual circumstances to the court.

The District Judge had failed to consider the debtor’s argument that a bankruptcy order would serve no useful purpose.

It was unjust to make the bankruptcy order and the appeal was allowed.

 

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Written by kerryunderwood

September 25, 2018 at 8:06 am

Posted in Uncategorized

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