BL - Insolvency Individual Bankrupt

Question 1

Bankruptcy - how is the debtor’s inability to pay evidenced?

Answer 1

• a statutory demand for £5,000 that has neither been satisfied within 21 days from service of that demand, nor set aside by the court; or
• a judgment debt that has been returned unsatisfied

Court has discretion to make a bankruptcy order.

Question 2

Bankruptcy - What restrictions are placed on the debtor?

Answer 2

• deprived of ownership of their property except for their reasonable domestic needs. 🏡
• obtaining credit of over £500 without disclosing the bankruptcy, 💷
• acting as a director or being involved in the management of a company, 🎩
• practising in certain professions. 👨‍💼
• giving gifts 🎁

Question 3

Who manages the Bankrupts’ assets?

Answer 3

The bankrupt’s estate vests in the Trustee in Bankruptcy immediately upon appointment of trustee or Official Receiver

Question 4

What is the order of creditors in a personal bankruptcy?

Answer 4

• secured creditors (but limited to the value of the security itself and ranking with ordinary unsecured creditors for any excess amount owing); 🏡⛓️
• expenses of the bankruptcy; 🤓
• specially preferred creditors (training/apprenticeship fees);👨‍🏫
• preferential creditors (similar to those on corporate winding up); 🧑‍🍳🇬🇧
• ordinary unsecured creditors; 😒
• statutory interest; 🏦
• debts of a spouse (must be provable but they are postponed to other creditors); and finally, 👰
• any surplus is payable to the bankrupt. 🥳

Question 5

What are the duties of a Bankrupt in respect of the Trustee or Official Receiver?

Answer 5

(a) give information;

(b) attend on the trustee

(c) do all such other things, as the trustee may for the purposes of carrying out his functions reasonably require.”

Question 6

What if the debtor breaches their duty to the Trustee/Official Receiver?

Answer 6

It is a criminal offence could face
- imprisonment for up to two years and
- unlimited fines.

Also, the bankrupt runs the risk of having their automatic discharge suspended.

Question 7

When is a bankrupt generally discharged from bankruptcy?

Answer 7

1 year

Question 8

What a Bankruptcy Restriction Order?

Answer 8

Used in egregious cases for between 2 and 15 years:

• unable to act as a director 🎩
• unable to get credit of over £500 without disclosing the BRO 💷

Breach is a criminal offence punishable by fine and/or imprisonment.

Question 9

How does a bankruptcy begin

Answer 9

a creditor presents a bankruptcy petition.

Question 10

Who can a Bankruptcy petition be brought against?

Answer 10

An individual

• present or
• domiciled

in the UK