Disputed bankruptcy petitions
Disputed bankruptcy petitions

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

  • Disputed bankruptcy petitions
  • Coronavirus (COVID-19)
  • Conditions for making a bankruptcy order
  • Bankruptcy petitions issued on disputed debts
  • What constitutes a good petition debt and what doesn't?
  • The impact of the service of a statutory demand on the court's discretion to look into a disputed bankruptcy petition
  • Steps a debtor should take if they dispute the bankruptcy petition
  • What if the debtor does not dispute the debt but otherwise disputes the bankruptcy petition?
  • Collateral purpose
  • Bankruptcy order would serve no proper purpose

Disputed bankruptcy petitions

Coronavirus (COVID-19)

This content contains guidance on subjects impacted by the Coronavirus Act 2020 and related changes to court procedures and processes as a result of the Coronavirus (COVID-19) pandemic, including the Temporary Insolvency Practice Direction 2020. For further information, see Practice Notes: Coronavirus (COVID-19)—Changes to the court process in insolvency proceedings and The Temporary Insolvency Practice Direction Supporting the Insolvency Practice Direction (April 2021). For related news, guidance and other resources to assist practitioners working on restructuring and insolvency matters, see: Coronavirus (COVID-19)—Restructuring & Insolvency—overview.

Conditions for making a bankruptcy order

When hearing a bankruptcy petition and deciding whether a bankruptcy order should be made, the court needs to be satisfied that the conditions in section 271(1) of the Insolvency Act 1986 (IA 1986) are met. The key ingredients are that an unsecured debt, which forms the basis of the petition, is owed to the creditor, and the debtor has no reasonable prospect of being able to pay it.

In Day v Refulgent (which concerned an appeal from the making of a bankruptcy order), it was held that where a freezing order had been obtained by a creditor in respect of the debtor, that did not mean that the debt due to the creditor was secured to prevent the creditor from seeking a bankruptcy order.

For further reading on the Day v Refulgent decision, see News

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