Too late to adjourn a bankruptcy hearing to pay the petition debt—Edginton v Sekhon

Too late to adjourn a bankruptcy hearing to pay the petition debt—Edginton v Sekhon

In Edginton v Sekhon [2015] EWCA Civ 816, the Court of Appeal heard a second appeal in relation to a decision made by a deputy district judge at a bankruptcy hearing in which the debtor was refused an adjournment to pay the petition debt within a reasonable time.

Briefly, what were the facts of the case?

The appellant (Mr Edginton), a solicitor, had pursued his former clients, Mr and Mrs Sekhon, for payment of professional fees in respect of work that had been carried out some years previously and which were statute-barred. A costs order in the sum of £1,236 was made against Mr Edginton in July 2011 in relation to an unsuccessful application made by him. Some five months later, and with those costs not having been paid, Mr and Mrs Sekhon served a statutory demand on Mr Edginton.

Mr Edginton unsuccessfully applied to set aside the statutory demand, and in December 2013 (two years after the statutory demand had been served on him) Mr and Mrs Sekhon presented a bankruptcy petition against Mr Edginton.

Mr Edginton opposed the bankruptcy petition on the basis of:

  • his unpaid professional fees
  • costs orders made in his favour against Mr and Mrs Sekhon, which should be set off against the petition debt
  • his assertion that he was not insolvent and that his assets exceeded the petition debt

On the day of the hearing, Mr Edginton also made an application alleging that Mr and Mrs Sekhon were estopped from relying on the costs order on which the petition debt was based.

Despite acknowledging the catastrophic effect of a bankruptcy order being made against Mr Edginton given his profession as a solicitor, the deputy district judge rejected Mr Edginton’s arguments. There were other costs orders which had been made against Mr Edginton in Mr and Mrs Sekhon’s favour which exceeded the amount of the costs orders in Mr Edginton’s

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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.