Can the court annul a bankruptcy order obtained in order to defeat the divorce proceedings?
Can the court annul a bankruptcy order obtained in order to defeat the divorce proceedings?

The following Restructuring & Insolvency guidance note provides comprehensive and up to date legal information covering:

  • Can the court annul a bankruptcy order obtained in order to defeat the divorce proceedings?
  • A summary of the challenges available
  • The factors the court will take into account for an annulment of a bankruptcy order made to defeat divorce proceedings

It is not uncommon for bankruptcy and divorce proceedings to run concurrently, or for one set of proceedings to impact on the other. For further reading on the effect bankruptcy and divorce proceedings have on one another see Practice Note: The impact of bankruptcy on divorce proceedings.

Due to the impact bankruptcy proceedings can have on divorce proceedings (financial relief applications, known as property adjustment orders), there are sometimes situations where an unscrupulous divorcing party may allow themselves to fall into bankruptcy in order to defeat any ongoing divorce proceedings. In these circumstances, both the family and bankruptcy courts have the power (in the right circumstances) to challenge the bankruptcy order and its overall effect.

A summary of the challenges available

There are a number of challenges available to the non-bankrupt divorcing spouse, which can be pursued in both the bankruptcy and family court. These are:

  1. an application to annul the bankruptcy order

  2. an application to rescind the bankruptcy order

  3. an application to deal with the bankruptcy within the terms of the divorce proceedings

An application to annul the bankruptcy order

An annulment of the bankruptcy order is the most common route for the non-bankrupt divorcing spouse to take if the conditions are in place and the court is satisfied it can exercise its discretion. Therefore, even if the necessary conditions are

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