Partner Article

Facing a bankruptcy petition? You are entitled to a fair hearing

Judges are on the alert to ensure that debtors receive a fair hearing at every stage of insolvency proceedings warns Leanne Schneider-Rose of Sydney Mitchell LLP. In one case that proved the point, the High Court granted a businessman a fresh opportunity to seek an annulment of his bankruptcy.

A company to whom the businessman owed a £10 million judgment debt issued a bankruptcy petition against him. He argued that, by virtue of Section 256 of the Insolvency Act 1986, the English courts had no jurisdiction to consider the matter. That was on the basis that he was neither domiciled nor ordinarily resident in England and did not have his centre of main interests here.

In disputing those arguments, the company pointed out, amongst other things, that the businessman had been personally served in London with a statutory demand for the sum due. A bankruptcy order was granted against him and his bid to have that order annulled was rejected by a judge.

In upholding his appeal against the latter decision, however, the Court noted that the judge had failed to read or consider new material that the businessman had sought to put before her in support of his jurisdictional arguments. Her determination had thus been infected by a serious irregularity and the businessman had not received a fair hearing. In the circumstances, his annulment application was sent back for fresh consideration by a different judge.

This was posted in Bdaily's Members' News section by Sydney Mitchell LLP .