Healys Successful In Obtaining Annulment For Bankruptcy Order After 12 Years

22nd October 2018 by

Our client is a businessman who was the subject of a bankruptcy order made against him and wanted to apply to the court to have the order annulled.

Having left the country for personal reasons many years ago, the client instructed Healys in early 2017, having discovered that a bankruptcy order had been made against him in 2006. Given his absence at the time and lack of knowledge of the order, his discharge from bankruptcy was also suspended. Due to the passage of time, obtaining information on the petitioner and reason for suspension was difficult since the court had limited information on its file. Furthermore, the Official Receiver no longer held a paper file, and had changed its systems twice since the bankruptcy. Healys’ attempts to trace and locate the petitioning creditor were however, ultimately successful, the petitioner being established as a well-known bank.

Michael Ellis began negotiating with the bank, who ultimately decided to write off its debt, and attempts were made to locate the other creditors in order to discharge their debt and to apply for the bankruptcy to be annulled. Whilst liability to one other creditor was discharged in full, two other creditors remained untraced and Healys LLP was placed in funds by a third party to cover creditors’ claims in full. At the first Hearing of our client’s annulment in April the bank opposed the application for annulment, despite having previously agreed to write off the debt, and the Official Receiver filed a report indicating that he would oppose the annulment order since creditors had not been paid in full. The application was therefore adjourned.

After protracted negotiations with the bank and on making representation to it, the bank indicated that it would neither support nor oppose the order sought. An Annulment Order was therefore made at the next Hearing date in June 2018, together with an order dismissing the bankruptcy petition on the following conditions: (i) Advertising in the London Gazette for the untraced creditors to prove and (ii) payment of £x into court being the total amount owed to the untraced creditors (to be held for 12 months for the untraced creditors to prove). The court order stated that on compliance with the set out terms, an Annulment Order would be made and the bankruptcy petition dismissed, on the day of receipt by the court of the bankrupt’s witness statement showing evidence of compliance with the conditions set out by the court.

There is no set period laid out by the Insolvency Act 1986 by which an application to the court must be made, even after the bankrupt is discharged. However, due to the application being discretionary, long periods of time between the making of the bankruptcy order and the application to annul may mean that the court will not annul a bankruptcy order.