Expenses in insolvency

Insolvency and expenses - an evolving issue. In recent months it has been the corporate insolvency court which has been the busiest. However, the bankruptcy court has recently come up with its own decision. We analysed that on our website but thought we would share it. (remember if you are interested in what you see and want to see more on our Restructuring & Insolvency content, please see www.trialpsl.com)

This note looks at the case of Appleyard v Wewelwala and examines the lacuna in bankruptcy law on whether a trustee's expenses should be paid and by who when the bankruptcy order is set aside on appeal.

Appleyard v Wewelwala--the facts

Appleyard v Wewelwala [2012] EWHC 3302 (Ch)

This is a decision of Mr Justice Briggs, following an application by the trustee in bankruptcy (Andrew Appleyard) (the trustee) of Chithra Wewelwala (the bankrupt) for directions following the bankruptcy order made against the bankrupt being set aside on appeal.

The bankrupt was made bankrupt in April 2011 on the petition of a creditor, Davenham Trust (the creditor). It was noted in the judgment (para 3) that after the bankruptcy order, the bankrupt made a written application seeking permission to appeal the bankruptcy order, which was refused by Mr Justice Floyd. Following that refusal, the Official Receiver (OR) appointed the trustee to act. From that date (July 2011), the trustee began incurring expenses in discharging his duties (ie collecting information on assets and claims).

In October 2011, the bankrupt made an application for permission to appeal, this time to be heard orally. The application was adjourned and the creditor was directed to attend the adjourned hearing. The order adjourning did not state that the appeal would immediately follow if permission to appeal was granted, or that the bankrupt should notify the trustee of the adjourned hearing.

It was common ground that the bankrupt had not informed the trustee. In December 2011, the application was heard and the appe