Bankruptcy petitions generally
September 1997
45.82 Who may petition for bankruptcy
(Amended October 2010)
A bankruptcy order can only be made as a result of a petition for such an order being made to the court [Note 1]. A bankruptcy petition can be presented by any of the following [Note 2]:
a. one of the individual’s creditors or jointly by more than one of them,
b. the individual himself / herself,
ba. a temporary administrator (within the meaning of EC Regulation)
bb. a liquidator appointed by virtue of Article 3(1) of EC Regulation
c. the supervisor of, or any person (other than the individual) who is for the time being bound by a voluntary arrangement proposed by the individual and approved under Part VIII of the Act, or
d. where a criminal bankruptcy order has been made against the individual, by the Official Petitioner or by any person specified in the order in pursuance of section 39(3)(b) of the Powers of Criminal Courts Act 1973
45.83 Supervisor of voluntary arrangement to petition
The court cannot make a bankruptcy order on the petition of the supervisor of a voluntary arrangement (or a person bound by it) unless it is satisfied that the debtor has failed to comply with his obligations under the voluntary arrangement or supplied false or misleading information to obtain the voluntary arrangement or has not done everything that the supervisor reasonably expected of him [Note 3].
Where an order is made on the petition of the supervisor or by a creditor bound by the voluntary arrangement, under the provisions of s276 and s264(1)(c), then it is no longer appropriate for the voluntary arrangement to remain in being and it is therefore terminated. Unless the arrangement provides otherwise, any funds held by the supervisor become part of the bankrupt’s estate (subject to the claims of any third party which may have supplied those funds) and where the order is made on a debtor’s petition the expenses of the failed voluntary arrangement are a first charge on the bankrupt’s estate in respect of the assets that were part of the voluntary arrangement [Note 4] [Note 5] [Note 6].
45.84 Domiciliary and residence rules
Neither the debtor himself nor a creditor can present a petition unless the debtor is domiciled in England or Wales (a person’s domicile is the place in which he has his permanent and fixed home and to which, whenever he is absent, he has the intention of returning); is personally present in England and Wales on the day on which the petition is presented; or at any time in the previous 3 years has been ordinarily resident, has had a place of residence or has carried on business in England and Wales [Note 7].
45.85 Other preliminary conditions
(Amended August 2012)
If the petitioner is able to present a petition under two or more paragraphs of s264(1), he must identify which one he is presenting the petition under (i.e. as a creditor or as the supervisor of a voluntary arrangement).
A creditor shall, before presenting a petition, conduct a search for petitions presented against the debtor in the previous 18 months in-
A petition may not be withdrawn without leave of the court. The court has the general power to dismiss a petition or to stay the proceedings for any reason and on such terms and conditions as it thinks just [Note 8].
45.85a Can a non-provable debt be the basis of a bankruptcy petition? (added April 2014)
A debt which is not a provable debt (see Chapter 40, Part 3) is nevertheless a bankruptcy debt (see paragraph 40.8). It follows logically therefore that it is possible to present a bankruptcy petition in respect of such a debt and that the court has jurisdiction to make a bankruptcy order on such a petition.
Notwithstanding this apparently logical position, the court has held that it would be very difficult to envisage the exceptional circumstances which would justify the making of a bankruptcy order on a petition in respect of a provable debt [note 9]. It was considered that such circumstances would be limited to a change in the carriage of the petition (see paragraph 45.130).
It was further held [note 10] that, where there is no real prospect of a bankruptcy order being made in respect of a non-provable debt, the correct course is to set the statutory demand (see paragraph 45.103).
45.85b Statute barred debts (added March 2014)
The legislation sets limits beyond which court action cannot be taken to seek recompenses (see paragraph 40.11), but it does not contain any specific provisions setting limits for the commencement of winding-up proceedings.
The legislation [note 11] states that an action shall not be brought on any judgment after the expiration of six years from the date on which the judgment became enforceable. The legislation [note 12] further defines an action as including any proceedings in a court of law.
The court has concluded that winding-up and bankruptcy proceedings are not an action upon a judgment, and are not therefore subject to the six-year limitation period [note 13].
The court also considered the position of a non-judgment creditor and concluded that a person who is owed a debt under a contract is not entitled to present a petition after the six-year limitation period [note 14].
[Back to Part 7 - Bankruptcy and the jurisdiction of the courts] [On to Part 9 - Creditor’s bankruptcy petition - grounds]