Sometimes mistakes happen. It may be that you find yourself subject to a bankruptcy order and it is your belief that it shouldn’t have been made as you can pay your creditors. In such circumstances an application can be made to the court for the cancellation of the bankruptcy order (in insolvency this is referred to as the annulment of a bankruptcy order).
A bankruptcy order can be annulled on one of the following grounds:
- If it can be shown to the court that there was no justification for the making of the bankruptcy order in the first instance.
- If it can be shown, that all of the debts and expenses of the bankruptcy have been paid in full or secured to the satisfaction of the court.
- If it can be shown that a formal individual voluntary arrangement (“IVA”) is in place with regard to the payment of outstanding debts as at the date of the bankruptcy order.
It is not just the person affected by a bankruptcy order (“the debtor”) who can make an application for the annulment of a bankruptcy order, it can also be made by the Trustee in bankruptcy (the person who controls the debtor’s estate otherwise know as “the Trustee”) or by a third party who has been affected by the bankruptcy order.
The most common ground for making an application to annul is that all of the debts and expenses of the bankruptcy have been paid in full as shown at point 2. This type of application is mostly commonly used by the debtor. The following are the steps in the application:
- Evidence must be provided to the court confirming that all of the bankruptcy debts have been paid in full. This can be done by paying each individual creditor or paying the monies due to the Official Receiver (“OR”) or the Trustee. If this can not be done, evidence confirming that security has been provided to creditors ensuring that all the debts will be paid in full should be provided instead.
- Sufficient funds should be provided to either the OR or the Trustee in order to settle all the expenses of the bankruptcy.
- The annulment application stating the ground for annulment is filed at court plus additional copies for service.
- The court will provide notice of a hearing.
- The applicant must serve notice of the hearing on the Trustee or the OR in his capacity as Trustee.
- The Trustee or the OR in his capacity as the Trustee will need to make a report to the court with regard to the bankruptcy and serve a copy of that report on the applicant and/ or the debtor.
- The applicant may file and serve a Witness Statement in response to the aforementioned report.
- The Trustee must attend the hearing.
- An order for the annulment of the bankruptcy is made at the hearing.
- A request can be made that the order be advertised in the same manner in which the bankruptcy order was.
As you can see from above, an application for the annulment of a bankruptcy order can be made in a variety of ways by a variety of applicants. Regardless of the circumstances we can offer clear and easy to understand advice on the best way forward. This is a highly technical area of law and mistakes can easily be made; we can assist in making sure an application has the best possible chance of success.