Annulment of bankruptcy order meaning

Annulment: payment in full Under section 282 of the Insolvency Act 1986 (IA 1986), a bankrupt may apply to have their bankruptcy annulled where they can discharge in full, and in particular in their entirety, the bankruptcy estate’s costs, expenses and claims, or, alternatively, provide security for those sums, as applicable. This Checklist and timeline sets out the procedure for annulment applications on this basis, identifying each step sequentially after settlement of the estate’s costs, expenses and claims, from payment through to the making of the annulment order, together with the matters that must be addressed once the order has been made, thereafter. It shows the stages in order. This Checklist and timeline does not apply to, or address, applications brought on the alternative ground in IA 1986, s 282(1)(a), namely a contention that the bankruptcy order should not have been made. For a Checklist and timeline dealing with applications on that alternative basis, see: Summary checklist and timeline for annulment applications where bankruptcy order ought not...

Annulment: bankruptcy order ought not to have been made One of the grounds in section 282 of the Insolvency Act 1986 (IA 1986) on which a bankrupt may seek annulment is that the bankruptcy order should not have been made. This Checklist and timeline summarises the procedure for applications brought on that basis, setting out the journey from preparing the application for issue right through to the making of the annulment order, together with matters to be addressed once the order is made. Drafting the application for issue Making of the annulment order Post-order matters to be dealt with This Checklist and timeline does not apply to applications relying on the alternative ground under IA 1986, s 282—where the costs, expenses and claims of the bankruptcy estate are paid in full or secured. For a Checklist and timeline dealing with that alternative, see: Summary checklist and timeline for annulment applications where payment in full—the position under the Insolvency (England and Wales)...

Sriram (acting by her litigation friend, the Official Solicitor) v Revenue and Customs Commissioners and another [2024] EWHC 853 (Ch), [2024] All ER (D) 86 (Apr) What are the practical implications of this case? Creditors should act with care to ensure that service of a statutory demand (and bankruptcy petition) is properly effected, particularly where a debtor seeks to avoid service and has several addresses. Attempts to serve ought to be clearly and contemporaneously recorded. Creditors are required to take all reasonable measures to bring the document or documents to the debtor’s attention. However, this does not oblige them to attend or write to every address associated with the debtor that they know about. The addresses that must be tried will depend on the circumstances of the individual case. A wide, scattergun strategy to service is not expected. By way of example, if a debtor holds multiple properties and there is no reply to a visit or correspondence at one property, that location may not amount to a ‘known’...

Lin v Gudmundsson concerned a husband adjudged bankrupt on a creditor’s petition. The wife sought to have the bankruptcy annulled, but the court declined. The decision matters for two principal reasons: it underlines that, for insolvency in this setting, the spotlight is on the bankrupt’s cashflow rather than on their assets it clarifies the distinct evidential burdens on creditor-initiated petitions and debtor-made applications Written by Steven Fennell, barrister at Exchange Chambers. Lin v Gudmundsson (a bankrupt) and others [2021] EWHC 820 (Ch), [2021] All ER (D) 29 (Apr) What are the practical implications of this case? Advisers assisting a spouse contesting the other’s bankruptcy must concentrate squarely on the bankrupt’s liquidity on the date of the order. Demonstrating that assets exceeded debts by a wide margin will not suffice. The issue is whether those assets were readily realisable so that the petition debt and all other liabilities could be discharged in full as at the petition date or within a very...

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A bankrupt is discharged from bankruptcy one year after the bankruptcy begins, unless the court suspends that discharge because the bankrupt has failed to co-operate with the official receiver (OR) or the trustee in bankruptcy (trustee) (IA 1986, s 279). On discharge, the disqualifications and restrictions that apply to an undischarged bankrupt come to an end. For further detail on those disqualifications and restrictions, see Practice Note: The immediate effects of a bankruptcy order on the bankrupt. What is the bankruptcy restrictions regime and why was it introduced? In cases where bankruptcy is not the product of honest misfortune, but arises from the bankrupt’s misconduct or recklessness, it is regarded as appropriate that the bankruptcy disqualifications and restrictions should continue for longer than one year, to protect the public interest and act as a deterrent. Accordingly, the Enterprise Act 2002 (EnA 2002) introduced a new section (IA 1986, s 281A) and a Schedule (IA 1986, Sch 4A) into the IA 1986, so that, from 1 April 2004, the...

Effect of a bankruptcy restrictions order The effect of a bankruptcy restrictions order (BRO) is to place extensive limits on a bankrupt. These mirror the constraints in force before discharge from bankruptcy, and there are further prohibitions beyond insolvency law, e.g. not serving as a local councillor. Where a bankrupt is made subject to a BRO, those limits persist for the length of the BRO, irrespective of whether discharge has occurred. Failing to observe a BRO is a criminal offence. Anyone breaching a BRO may face prosecution and can be fined, imprisoned, or both. Further information on the restrictions arising from a BRO is outlined below. Duration of a BRO A BRO under the Insolvency Act 1986 (IA 1986) may run from two to fifteen years. The period imposed in any case is set by reference to the seriousness of the misconduct that resulted in the BRO being made...

This Practice Note outlines the procedure for annulling a bankruptcy order under one of the two bases in section 282(1) of the Insolvency Act 1986 (IA 1986). It does not address annulment where an undischarged bankrupt has entered into an individual voluntary arrangement (IVA). For more detail on what annulment involves, the possible grounds, and the court’s discretion to annul, see Practice Note: Annulment of bankruptcy orders. See also the following checklists for applications relying on the alternative grounds: Summary checklist and timeline for annulment applications where bankruptcy order ought not to have been made Summary checklist and timeline for annulment applications where payment in full The application The application is made under IA 1986, s 282, which sets out two separate routes for annulling a bankruptcy. The application notice must include the information required by rule 1.35 of the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, and satisfy the content requirements in IR 2016, SI 2016/1024, r 10.132....

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