Bankruptcy/ Personal Insolvency

Question 1

Who is more at risk of bankruptcy?

Answer 1

Sole traders and partnerships

Question 2

What are some alternatives to Bankruptcy?

Answer 2

• Individual Voluntary arrangement
• Debt relief orders
• negotiation with creditors
• The breathing space regime

Question 3

Explain the process for an individual Voluntary arrangement

Answer 3

• Proposed by the debtor to the creditors to avoid bankruptcy
• Administered by insolvency practitioner (IP)
• Debtor applies to court for an interim order to prevent a bankruptcy petition being presented
• IP puts forward proposal to creditors
• if approved by majority then binding on creditors and debtors
• If not approved interim order is discharged.

Question 4

How can a creditors petition be proved?

Answer 4

• Non- compliance with statutory demand
• Failure to satisfy judgment debt

Question 5

On what grounds can a supervisor bring a petition forward?

Answer 5

• The debtor has failed to comply with their obligations under the IVA
• The debtor had provided false or misleading information in connection with entry into the scheme

Question 6

What restrictions are someone who has been made bankrupt under?

Answer 6

• Must disclose bankrupt status if taking credit over £500
• can’t set up business under another name without disclosing bankrupt status
• Can’t be company director or involved in promotion/management of a company, or practice as a solicitor/barrister
• Deprived of ownership of certain personal assets