April 2004
The chapter has been amended to include the bankruptcy provisions of the Enterprise Act 2002 which came into force on 1 April 2004.
The guidance on discharge in paragraph 21.1 applies to individuals made bankrupt on or after 1 April 2004 who subsequently have a further bankruptcy order or orders made against them.
Where the second or subsequent bankruptcy order was made before 1 April 2004 and the bankrupt remains undischarged at that date refer to Chapter 22 Annex 1 for information on the transitional provisions on discharge of second time bankrupts.
This chapter has been divided into 3 parts as follows:
Part 1 - Introduction(paragraphs 21.1 - 22.5)
Part 2 - Relationship between estates (paragraphs 22.6 to 22.21)
Part 3 - Section 426 and proceedings outside England and Wales (paragraphs 22.22 - 22.23)
The following abbreviations are used in this chapter:
AEDIO - Administration of Insolvent Estates of Deceased Persons Order 1986
CDDA86 - Company Directors Disqualification Act 1986
EA2002- Enterprise Act 2002
IA86 - Insolvency Act 2002
21.1EA Discharge of second time bankrupt
(updated October 2013)
Where a bankruptcy order is made against an individual on or after 1 April 2004, he/she is discharged , and a subsequent bankruptcy order is made against him/her, he/she will be automatically discharged from the second/subsequent bankruptcy one year from the date of the second/subsequent bankruptcy order.
The bankrupt may be discharged earlier if the official receiver follows the early discharge process, (this does not apply to cases where the bankruptcy order was made on or after 1 October 2013 -see Chapter 22 Part 2) or later if the court makes an order suspending the bankrupt's discharge following an application by the official receiver or trustee (see Chapter 22 Part 4).
If the first bankruptcy order was made before 1 April 2004 the guidance in Annex 1 of Chapter 22 should be followed.
Notes: [s279(1)] [s279(3)]
21.2EA Bankruptcy restrictions orders and discharge of second time bankrupt
(updated October 2013)
If the official receiver makes application for a bankruptcy restrictions order (BRO) or accepts a bankruptcy restrictions undertaking (BRU) then the second time bankrupt;
(For further guidance see Chapter 22 Part 1 and Part 2)
If the bankrupt is discharged early under s279(2) and the official receiver subsequently considers that a bankruptcy restrictions order (BRO) would be appropriate, the official receiver may make an application for a BRO;
It may be appropriate to make application for a BRO between the date of early discharge and the 12 month anniversary of the bankruptcy order where for example,
Notes: [IA86 Sch 4A para 3]
21.3 Foreign proceedings - including Scotland and Northern Ireland
A second or subsequent bankruptcy refers only to orders made under the bankruptcy jurisdiction of courts in England and Wales. If the bankrupt is involved in a similar insolvency elsewhere (including Scotland and Northern Ireland), the respective trustees will normally have no title to undistributed assets in the other jurisdiction and no right to prove in the other proceedings as sections 334 and 335 do not apply (Re: Temple (1947) Ch 345) but see paragraphs 21.22 and 21.23.
21.4 Reviewing of previous file; offences
Where a bankrupt is undischarged from a previous bankruptcy, or has been undischarged from such a bankruptcy at any time preceding his current bankruptcy, in the later bankruptcy particular attention should be paid to whether any offences have been committed in relation to his obtaining credit or acting, either directly or indirectly, in the management of a company. Please note that section 360 also applies if the previous bankruptcy was in Scotland or Northern Ireland and section 11 CDDA 1986 applies if the previous bankruptcy was in Scotland. The previous office file should always be examined, especially in relation to the cause of failure, in the earlier bankruptcy and the pattern of events preceding it. Often this will provide a guide to particular areas of conduct which may also feature in the subsequent failure.
Notes: [s360(3) and s11 CDDA 1986]
21.5EA Previous failure and bankruptcy restrictions orders
In determining whether an application for a bankruptcy restrictions order (BRO) is appropriate, the court will consider whether the bankrupt was an undischarged bankrupt at some time during the period of 6 years prior to the current bankruptcy order. Similarly, in determining whether to accept a bankruptcy restrictions undertaking (BRU) the official receiver should have regard to whether the individual was an undischarged bankrupt in the previous 6 years.
A previous failure is not listed in the grounds for a BRO application but is a matter for consideration when making an application. The official receiver cannot therefore make application for a BRO solely as a result of the bankrupt having a previous failure. It is likely therefore that there needs to have been unfit conduct in respect of the current bankruptcy, before an application is made. If, however, it can be shown that a bankrupt has failed to learn from previous mistakes, the court may take this into account when considering the BRO application and may make the order for a higher period.
Applications for BROs can only be made (or BRUs can only be accepted) in cases where the unfit conduct occurs after 1 April 2004.
Notes: [Sch 4A para 3]
[Onto Part 2 - Relationship between estates]