Bankruptcy order refused where creditors issued petition for ulterior purpose—Re Maud, Maud v Aabar Block Sarl and another

Bankruptcy order refused where creditors issued petition for ulterior purpose—Re Maud, Maud v Aabar Block Sarl and another

In Re Maud the High Court considered how it should approach a bankruptcy petition alleged to have been presented for an ulterior purpose. Tina Kyriakides, barrister specialising in insolvency law at Radcliffe Chambers, sets out what lessons can be learned from this case.

Original news

Re Maud, Maud v Aabar Block Sarl and another [2016] EWHC 2175 (Ch), [2016] All ER (D) 51 (Sep)

The Chancery Division allowed a debtor’s appeal against a bankruptcy order. The court concluded that the registrar had not taken the correct approach to the petition as a matter of law. He had focused on whether the court could be satisfied that the petitioner had an ulterior objective in presenting the petition and had omitted a critical stage in the exercise of his discretion of addressing the interests of the class and weighing the views of the creditors who supported and opposed the making of the bankruptcy order.

What practical lessons can those advising take away from this case?

It is likely to be a rare case when a debtor will be able to show that the sole purpose of a petitioner presenting a petition was for his own benefit to the detriment of other creditors in his class. However, advisors should bear in mind that if there is evidence that one of the purposes was a collateral purpose, this might be deployed in the event that other creditors oppose the petition.

What was the background to the appeal?

Aabar Block Sarl and Edgeworth Capital (Luxembourg) Sarl (the creditors) presented a bankruptcy petition against Glen Maud (the petition). The petition was opposed by Mr Maud and also by a number of other creditors. Mr Maud was a director and 50% shareholder of a Dutch company, Ramblas Investments BV (Ramblas), which through a Spanish subsidiary, Marme Inversiones 2007 SL (Marme), owned a very substantial office and real estate complex

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.