2. Advantages
• Very Fast
• A certain date in the Debtors mind
• Lower “small claims” limit
• Availability of CFA and Insurance
3. Test of Insolvency
• S123 Insolvency Act 1986
– Served a statutory demand, or
– HCEO returns writ of fi-fe
– Sheriff returns on decree (SCOT)
– Certificate of unenforceability (NI)
– “some other reason”
4. Demand Letter
• A demand in writing
• Giving 2 clear days to pay or set out defence
• Sets out consequences for non compliance
• Establishes a rebuttable presumption of
insolvency
5. Winding Up Petition
• Filed with the High Court
• Based on the proof of insolvency
• Gives time and date of hearing
• Is advertised in the London Gazette
• May only be withdrawn if the court agrees
6. Statutory Demands
• Prepared by the creditor, not the court
• Personal service on the debtor at his/her
home
• Gives 18 days to apply to court if disputed
• Gives 21 days to pay
• Establishes a rebuttable presumption of
insolvency
7. Bankruptcy Petition
• Filed with the County Court
• Based on the proof of insolvency
• Gives time and date of hearing
• Is not advertised
8. Post Insolvency
• The Insolvency Service is appointed
• They call in the assets of the debtor
• They may appoint an IP
• They report to the creditors at the end of the
appointment
• A dividend may be awarded to the creditors
Notas del editor
A winding up order will not be made on the basis of a debt which is genuinely disputed – Re LHF Wools Ltd (1970) Ch 27Also the case where the company has a cross claim which exceeds the petition or reduces the debt below £750 – Re BayOil SA (1998) BCC 988However, petition will not be struck out simply because the company states the debt is disputed, there must be a real and substantial dispute – In Re a Company 6685 of 1996 (1997) BCC 830A petition may not be presented on the basis of a statute barred debt – Re Karnos Property Ltd (1989) 5BCC 14But a judgement never expires – Ridgeway Motors (Isleworth) Ltd (2005) EWA Civ 92Failure to pay a debt which is due and payable and not disputed is in itself evidence of insolvency under s123(1)(e), even though the company can show a significant surplus of assets over liabilities – Cornhill Insurance v Improvement Services Ltd (1986) 1 WLR 114A statutory demand is not required. A letter will suffice – Taylors Indstrial Flooring (1990) BCC 44
A statutory demand is not required. A letter will suffice – Taylors Industrial Flooring (1990) BCC 44
S268 Insolvency Act 1986The debtor appears to be unable to pay their debts as and when they fall due if either – The petitioning creditor has served a demand in prescribed form requiring him to pay the debt or secure it to the Creditors satisfaction and three weeks have passed, and it has not been complied with or set aside, orExecution of the debt has proved unsuccessful on a judgement or order of the court.ORS268(2) – a debt not due and payable yet, but a demand in prescribed form has been served and the creditor has not been assured that the debt will be paid.If s268 is met, it is no defence that the debtor is in fact solvent. A solvent debtor may still be made bankrupt. Johnson v Tandridge DC (2008) BPIR 405
S271 Insolvency Act 1986“The court shall not make a bankruptcy order unless it is satisfied that the debt in respect of which the petition is presented is either :- a debt on which, having been payable at the date of the petition or having since become payable, has not been paid or secured or compounded for, or, a debt to which the debtor has no reasonable prospects of being able to pay when it falls due.“ The court may dismiss the petition if it is satisfied that the debtor is able to pay all his debts or is satisfied :- that the debtor has made an offer to secure or compound the debt that the acceptance of such an offer would require the dismissal of the petition, and that the offer has been unreasonably refused