Where a debtor's assets exceed his liabilities, the onus is on the debtor to prove he can not pay his debts if a creditor seeks to annul the bankruptcy order.

In Paulin v Paulin and another, the defendant petitioned for his own bankruptcy claiming he was unable to pay his debts. The claimant applied for the order to be annulled claiming the defendant could afford to pay his debts and was deliberately attempting to defeat her claims in the matrimonial proceedings.

An agreement signed by a director on behalf of his company containing a promise by the company to pay for goods to be ordered in the future, rendered the director personally liable where he knew at the time of signing that the company was insolvent and had no prospects of becoming solvent.

The claimant appealed against a decision that her former husband’s one third interest in the matrimonial home vested in his trustee in bankruptcy (the first defendant) free from any rights asserted by her, so permitting an order for possession and sale of the property. The claimant argued that pursuant to a matrimonial consent order made prior to the bankruptcy, she had a right of exclusive occupation of the property until remarriage, cohabitation or death.

The Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020 will apply to all business insolvencies that commence on or after 1 December 2020. They provide for certain debts owed to HM Revenue & Customs (HMRC) to become preferential debts in the event of a business entering a formal insolvency. It is important that creditors understand whether they are affected by these changes so that they can decide whether they need to take steps to protect their position.

The relevant debts

The High Court decision in Re All Star Leisure (Group) Limited (2019), which confirmed the validity of an administration appointment by a qualified floating charge holder (QFCH) out of court hours by CE-Filing, will be welcomed.

The decision accepted that the rules did not currently provide for such an out of hours appointment to take place but it confirmed it was a defect capable of being cured and, perhaps more importantly, the court also stressed the need for an urgent review of the rules so that there is no doubt such an appointment could be made.

The Court of Appeal considers 'reasonable adjustment' in the context of possession proceedings

The first case in which the Equalities legislation has been raised as a defence to a mortgagee's claim for possession has recently been before the Court of Appeal.

This month we consider the court's view on the extent to which firms' activities in handling complaints are themselves subject to adjudication by the Financial Ombudsman Service; the exercise of the court's discretion in refusing an unopposed application to annul a bankruptcy order; and more cases and issues affecting the industry:

The High Court considers the remit of the FOS's jurisdiction

Key points

The Insolvency Service has published its policy, which came into effect on 1 December 2010, on realising a bankrupt's principal residence where the Official Receiver (OR) is appointed as the trustee in bankruptcy.

The policy provides that the OR will not take any steps to market the bankrupt's interest in the property for a period of two years and three months from the date of the bankruptcy order. However, the OR can accept any unsolicited offer in relation to the property if it is in the best interest of creditors. After the expiry of the two years and three months:

S271 Insolvency Act 1986 provides that a bankruptcy petition may be dismissed if the court is satisfied that a debtor can pay his debt, or has made an offer to secure or compound the debt, the acceptance of which offer would lead to the petition being dismissed and that the offer has been unreasonably refused. But what is a reasonable refusal?