Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Bankruptcy definition

What does Bankruptcy mean? Bankruptcy is the formal insolvency process for individuals who cannot pay their debts. It halts most enforcement, vests the bankrupt’s estate in a trustee, and realises assets and surplus income for creditors until discharge. In England and Wales, under the Insolvency Act 1986, a debtor applies online to the Adjudicator for a bankruptcy order; creditors petition the court. The Official Receiver acts as trustee unless an insolvency practitioner is appointed. Discharge is usually after 12 months; income payment orders/agreements can run up to three years; bankruptcy restrictions orders may extend restrictions. Scotland uses sequestration under the Bankruptcy (Scotland)...

Bankruptcy Restrictions Undertakings (BRUs) in England and Wales: legal framework, procedure, grounds, duration, effects, annulment, costs and register; relationship with BROs and interim BROs

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

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 bankruptcy restrictions regime took effect...

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Lydia Pemberton

3 PB Barristers

Lydia’s practice comprises contentious chancery matters, specialising in contentious probate, and insolvency – dead people, dead companies!She has a particular interest in personal insolvency and advises both trustees and debtors across all aspects of this area. She has extensive experience in section 423 IA 1986 applications and sham transactions.Lydia represents the Attorney General in CDDA and IA proceedings and acts for both office-holders and directors following a company insolvency.Her work within chancery focuses on the substantive validity of wills and other claims against estates by beneficiaries, creditors and Inheritance Act claimants....

Web page updated on 21/05/2026

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