Kerry Underwood

BANKRUPTCY PETITION REMEDIED WHERE NO PREJUDICE

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Moorgate Industries UK Ltd v Mittal [2020] EWHC 1550 (Ch) (19 June 2020)

the Chancery Division of the High Court remedied a creditor’s defective bankruptcy petition, using rule 12.64 of the Insolvency (England and Wales) Rules 2016, where no prejudice had been caused to the debtor.

Here, the creditor had included accrued interest on the judgment debt stated in the statutory demand and converted it from a foreign currency to sterling, but a creditor’s bankruptcy petition should not include interest which has accrued after the date of the statutory demand – see  Paragraph 12.2.2 of the Insolvency Practice Direction (July 2018).

While rule 10.9(1)(e) of the Insolvency (England and Wales) Rules 2016, arguably allows a petitioner to claim a rate of charge or interest if stated in their statutory demand, this is not how the court has traditionally understood the legislation.

Rule 14.21 of the Insolvency (England and Wales) Rules 2016 sets out the only currency conversion requirement in the insolvency legislation, which provides that a proof for a debt incurred or payable in a foreign currency must state the amount of the debt in that currency, and the trustee in bankruptcy then converts the debt into sterling using the exchange rate prevailing on the date of the bankruptcy order.

As no prejudice had been caused to the debtor by these defects, the court remedied them by using rule 12.64 of the Insolvency (England and Wales) Rules 2016 by reducing the amount claimed in the creditor’s petition to the amount claimed in their demand.

The court also declined to apply its discretion, under section 266(3) of the Insolvency Act 1986, to stay or dismiss proceedings as the creditor owed a costs award to the debtor following the withdrawal of an earlier bankruptcy petition.

There was no authority preventing a creditor from presenting a second petition where a costs order, made on withdrawing an earlier petition, remained unpaid.

Instead, it permitted the creditor to apply equitable set-off of the costs award against the debt owed by the debtor.

The decision reflects the approach taken with defective statutory demands which contain incomplete, misleading or inaccurate details of the debt since –

Agilo Ltd v William Henry [2010] EWHC 2717 (Ch).

Here, the court made the bankruptcy order on the creditor’s remedied petition as there was no evidence of a reasonable prospect of it being paid in full within a reasonable period of time.

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

July 3, 2020 at 9:26 am

Posted in Uncategorized

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