Part 1 – Information applicable to annulment generally

July 2008

Part 1 – Information applicable to annulment generally

6A.4 Annulment of bankruptcy order

The court may annul a bankruptcy order in the following cases:

  1. where, on grounds existing at the time the order was made, the order ought not to have been made; [Note 1]
  2. where, to the extent required by the rules, the debts and expenses of the bankruptcy have either been paid or secured to the satisfaction of the court; [Note 2]
  3. on an application by the Official Petitioner the court may annul a bankruptcy order made on a petition presented under section 264(1)(a), (b) or (c) where a criminal bankruptcy order is in force (and no appeal is pending against conviction) and where the bankruptcy petition so presented was pending when the criminal bankruptcy order was made or was presented after the bankruptcy order was made; [Note 3][Note 4]
  4. on application by the Official Petitioner where a petition was presented under section 264(1)(d) and the criminal bankruptcy order had been rescinded in consequence of an appeal; or
  5. where an individual [Note 5] or fast track [Note 6]  voluntary arrangement has been approved.

The most common grounds used to apply for annulment of a bankruptcy order are those outlined at (a), (b) and (e).

 

6A.5 Notice to official receiver of application to annul

(Amended April 2010)

Notice of an annulment application, together with copies of the application and supporting witness statement setting out the grounds on which the application is made, must be given to the official receiver (and any trustee) by the applicant [Note 14].

 

6A.6 Stay of proceedings in annulment cases

(Amended June 2010)

The court may, in advance of the hearing, make an interim order which may include a stay of proceedings (see Chapter 6.34) [Note 7]. This could range from a stay of the entire proceedings in the bankruptcy to a stay of advertisement or even a stay of proceedings not directly connected with the bankruptcy taken by third parties against the bankrupt. Where an application is made for a stay of all or any part of the bankruptcy proceedings, the applicant must send copies of the application to the official receiver and any trustee in time to enable them to be present at the hearing and, if they wish to do so, to make representations[Note 8]. Where any order does include a stay, notice of this must be given forthwith to, Estate Accounts Services (EAS) at gpt.gazettestays@insolvency.gsi.gov.uk (see Chapter 6.45 to 6.48). It should be noted that where the court makes an order staying all or part of the bankruptcy proceedings, the rules relating to the application, or other matters related to the annulment, continue to apply (so that the official receiver or trustee may continue to take part in the annulment application)[Note 9]. 

For post 6 April 2010 petition cases, where the bankrupt has obtained a stay and has also applied for the annulment of the bankruptcy, he / she should be made aware of the provisions regarding disclosure on the Individual Insolvency Register (IIR) following an annulment as the bankrupt may wish to apply for a further order of the court to withhold this information. See paragraphs 6A.100 and 6A.100B for further information.

 

 

6A.7 Official receiver’s attendance at court on annulment application 

Where the official receiver has submitted a report in his/her capacity as receiver and manager or trustee [Note 10], and in cases where he/she has submitted a report in addition to that of the trustee [Note 11], he/she should attend court or be represented at the hearing. Where he/she is not the trustee, and has not submitted a report, the official receiver is not under any duty to attend [Note 12], and should notify the court in advance that he/she does not intend to be present at the hearing (if that is the case) unless he/she considers that he should attend. If the official receiver does not attend the hearing, he/she should ask to be notified of its outcome on conclusion.

 

6A.8 The petition and petition deposit

It is important that the annulment order specifies whether the petition has been dismissed or re-listed.   Where the bankruptcy order is annulled, the deposit shall be repaid to the extent that it is not required for payment of the relevant administration fee (unless a fee has become payable to an insolvency practitioner appointed under section 273) or unless the court orders otherwise, perhaps following an agreement between the parties (see Part 5 of this chapter for further information on costs incurred in annulment proceedings).

If the deposit is to be used to settle the costs the official receiver should ensure that it is sufficient to discharge the liability. Often it is not sufficient and so it is necessary to establish how and when the balance will be paid.

If the deposit is to be returned to the petitioning creditor’s solicitor the official receiver should ensure that this instruction is in the order.

If the petition is to be re-listed then the official receiver should ensure that the deposit is not included in the payment of the annulment costs. After the payment of the costs the deposit should be retained and transferred in to the new deposit suspense account, the re-listing of the petition has the effect of reverting the official receiver and petitioner to the pre-bankruptcy order position.

See also paragraphs 6A.9 to 6A.11 regarding treatment of the petition deposit where parallel bankruptcy proceedings occur, and Finance Notice F5/03.

 

6A.9  “Parallel” bankruptcy proceedings

It is possible that two bankruptcy orders may be made against an individual, often in different courts, in close succession.

Often, the later bankruptcy order will have originated from a petition presented before the petition to which the earlier bankruptcy order relates, particularly where the earlier bankruptcy order is made on a debtor’s petition e.g. the debtor files their own petition after a creditor’s petition has already been presented against them, and the court proceeds in the making of the order on the debtor’s petition as it is not aware of the presentation of the creditor’s petition.  Subsequently, the court dealing with the creditor’s petition makes an order based on that petition, again without knowledge of the order already made on the debtor’s petition). 

 

6A.10 Request to petitioner of later bankruptcy to apply for annulment

When dealing with parallel bankruptcy orders the official receiver may in the first instance make a request to the petitioner of the later bankruptcy to seek an annulment of the bankruptcy order made on their petition.  The court can be requested to make an order that their legal costs be treated as an expense of the remaining bankruptcy estate.  In the event that the petitioner refuses to make such an application for annulment, the official receiver should make the application and, also, seek an order as part of the annulment order to allow the deposit to be retained against the costs of doing so.

 

6A.11 Consolidation of parallel bankruptcy orders

As an alternative to asking the petitioner in the later bankruptcy to apply for an annulment, the official receiver may consider applying to consolidate the two parallel proceedings under the number of the first bankruptcy order (under rule 6.236) [note 13].  This has the advantage of enabling both petition deposits to be retained and the petitioning creditors costs to rank as an expense of the estate.  This method will also preserve the date of the first petition, which may be important if the official receiver is considering recovering any dispositions of property between the presentation of the petition and the bankruptcy order (under section 284), the opportunity to do this would be lost if the earlier petition were annulled.

See Chapter 7 – Transfer of Proceedings,  should either (or both) proceedings require transfer prior to effecting any of the applications outlined at paragraphs 6A.9 to 6A.11 

 

[Back to Introduction Annulment] [On to Part 2 Annulment order on grounds “ought not to have been made”]

 

Further Information