Bankruptcy remains the most well-known, and perhaps most feared, of the personal insolvency processes. Since the current threshold was introduced 30 years ago, it has been used by creditors owed as little as £750 as a dire threat to extract payment from reluctant debtors. However, the Government has stepped in and is squeezing the bankruptcy process, seeking to ensure bankruptcy is reserved for the most appropriate cases and encouraging alternative regimes for the management of small debts.
In a challenging economy bankruptcy increasingly stands accused of constituting a mechanism for debtors to escape their responsibilities at their creditors' expense. It understandably remains a live debate as to whether a bankrupt should be afforded the means of a protected pot of money for his future use while his creditors are left unrecompensed for their loss. The debate is not new, but the balance has perhaps shifted in a climate where creditor losses are felt particularly keenly.
Social media accounts can be “property of the estate” in a bankruptcy case of a business, and thus belong to the business, even when the contents of the accounts are intermingled with personal content of managers and owners. This principle was recently confirmed by the Bankruptcy Court for the Southern District of Texas in In re CTLI, LLC (Bankr. S.D. Tex. Apr.
The BIS and Scottish Affairs Commons Select Committees have published a joint report recommending greater protection for workers when a business is faced with insolvency. The report was issued in response to the recent collapse of City Link (The impact of the closure of City Link on Employment).
In Re Mark Irwin Forstater [2015] BPIR, the petitioning creditor presented a bankruptcy petition against the debtor, Mr Forstater, on 13 June 2014. It first came before the court on 30 July 2014, when it was adjourned to allow the debtor to take legal advice. At the adjourned hearing on 12 August 2014, the debtor indicated that he intended to pursue an IVA. The hearing was adjourned again to await the outcome of a meeting of creditors. The meeting of creditors was itself adjourned for 14 days from 1 September 2014 to 15 September 2014.
Income payments orders (IPOs) are an essential tool for the trustee in bankruptcy in realising a bankrupt’s assets. Until recently, it had been assumed that, absent circumstances akin to fraud, a trustee in bankruptcy could not touch a bankrupt’s undrawn pension. However, in Raithatha v Williamson, the court decided that an income payments order may be made where the bankrupt has an entitlement to elect to draw a pension but has not exercised it at the time of the application.
Drawn versus undrawn
In January 2015, the Government published legislation which proposes to increase the level of debt necessary for a creditor to present a bankruptcy petition to £5,000 from 1 October 2015 (Draft Insolvency Act 1986 (Amendment) Order 2015). This represents a significant increase on the current law which allows a petition to be presented on a debt of just £750. It has apparently been proposed to dissuade creditors from using this arguably aggressive mechanism to collect relatively low level debts.
Debt Relief Orders
We don’t know about you, but we’ve been following the contentious litigation between the Consumer Financial Protection Bureau (CFPB) and debt-relief services company Morgan Drexen pretty closely. The CFPB filed its lawsuit in August 2013, alleging, among other things, that the company deceived consumers into paying unlawful up-front fees for debt relief services by disguising them as fees related to “sham” bankruptcy services.
Client Alert February 5, 2015 Second Circuit to Lenders: Get Your UCC Filings Right By Geoffrey R. Peck and Jordan A. Wishnew1 INTRODUCTION On January 21, 2015, the U.S. Court of Appeals for the Second Circuit issued an opinion regarding a mistaken UCC-3 termination statement that all loan market participants should consider carefully.