Use it or lose it—getting insolvency applications in on time (Sands v Singh)

Use it or lose it—getting insolvency applications in on time (Sands v Singh)

What was the significance of the court’s decision in Sands v Singh? Joseph Curl, barrister at 9 Stone Buildings considers the extent to which the judgment clarifies the law regarding the filing and service of applications under the Insolvency Act 1986 (IA 1986) and evaluates what practical lessons can be taken away.

Original news

Sands and another v Singh and others [2015] EWHC 2219 (Ch), [2015] All ER (D) 304 (Jun)

The Chancery Division ruled that the claimant trustees in the bankruptcy of the first defendant had ‘applied’ for orders of possession and sale, within the meaning of IA 1986, s 283A(3), within the three-year time period after which, failing such application being made, the property would have re-vested in the bankrupt. The trustees’ attempt to issue the proceedings by delivering the application notice and tendering the relevant fee to the county court had been sufficient to engage IA 1986, s 283A(3), notwithstanding that the court had not issued the proceedings until a later date. IA 1986, s 283A(3) was not dependent upon the court doing anything, but merely required that ‘the trustee applies’.

What were the facts of the case?

A bankrupt’s trustees in bankruptcy made an application for possession and sale of a property formerly belonging to the bankrupt. This gave rise to a statutory complication to do with IA 1986, s 283A. When a bankruptcy estate contains a property that was, at the date of the bankruptcy, the home of the bankrupt, or the bankrupt’s spouse or civil partner, or the bankrupt’s former spouse or civil partner, then the special provisions of IA 1986, s 283A come into play.

IA 1986, s 283A is colloquially known as the ‘use it or lose it’ provision. IA 1986, s 283A(2) provides that at the end of the period of three years beginning with the date of the bankruptcy, such a home will

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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.