Part 2 Annulment order on grounds “ought not to have been made”
Examples or circumstances where the bankruptcy order may be annulled on the ‘ought not to have been made’ grounds are:
Except in genuine cases (e.g. double bankruptcy orders against the same person see paragraphs 6A.9 to 6A.11), in agreeing to hear an application for annulment on the grounds the order ought not to have been made, the court considers that it is granting the bankrupt an indulgence, in return for which it looks to see if there has been full co-operation with the official receiver, and it takes into consideration the extent of the bankrupt’s assets and liabilities.
The High Court is prepared to consider applications to annul bankruptcy orders on the grounds that the order ought not to have been made even where there are no formal defects in the proceedings. This is an expedient practice which has developed since the Insolvency Act 1986 came into force to enable bankruptcy proceedings to be brought to an end with the consent of the petitioner without going through the more cumbersome ‘payment in full’ process. (This process might be viewed as being a development of the procedure for rescission on the grounds of late payment which has been used for many years in the Companies Court.)
6A.15Official receiver’s role in an ‘ought not to have been made’ application
(Amended June 2010)
An ought not to have been made application for annulment is essentially a dispute between the debtor and the creditor. If the official receiver is asked by the bankrupt to advise on the annulment, he/she should keep his/her comments to procedural issues and should not include encouragement to the bankrupt to apply for an annulment.
The bankrupt should be referred to the leaflet produced by The Insolvency Service entitled; ‘Can my bankruptcy be cancelled?’ which is available from all official receivers’ offices and online at the Insolvency Service website at http://www.insolvency.gov.uk./guidanceleaflets/guides.htm#1.
The bankrupt or his/her advisors should not be given the impression that the official receiver will either support or oppose an application. At such hearings the High Court Registrars and District Judges form their own views from the information available to them before deciding whether or not to grant an annulment (see also paragraph 6A.85 regarding the discretion of the District Judge).
For post 6 April 2010 petition cases, where the bankrupt is seeking an annulment under these circumstances, the official receiver should ensure that he / she is made aware of the provisions regarding disclosure on the Individual Insolvency Register (IIR), particularly if the bankrupt has obtained a stay as an attempt to protect his / her business or reputation. The bankrupt may wish to seek a further order of the court to prevent disclosure on the IIR after the annulment. See paragraphs 6A.100 and 6A.100B for further information.
Where the annulment application is made on the grounds that the bankruptcy order ought not to have been made [Note 2], the applicant is only required to give sufficient notice to enable the official receiver and any trustee to be present at the hearing [Note 3]. In such cases the applicant must also give notice etc. to the petitioning creditor. In these cases the ‘contest’ is between the bankrupt and the petitioner. The official receiver should not take sides but should assist the court and seek to protect his/her costs position.
(Amended February 2014)
The official receiver may attend the hearing in cases where he/she can assist the court but should bear in mind that the matter is essentially between the bankrupt and the petitioner (see paragraph 6A.15). By attending the hearing the official receiver can seek to ensure payment of his/her costs of the bankruptcy proceedings to date. Where a regional official receiver requires representation at an annulment hearing in the High Court, these are now dealt with via a monthly rota system shared between London A and B. The official receiver should contact London A or B providing as much information as possible, including whether or not the bankrupt has co-operated with the official receiver, total amount of unsecured liabilities the total expected value of the assets, and the costs incurred to date in the proceedings. The costs incurred will include any insurance premiums paid or cancellation charges incurred (see paragraph 49.19).