Q&As

Following obtaining a money judgment, if an order is granted by the court in relation to a general stay on execution (pending the outcome of an application to set aside the judgment) will this prevent the judgment creditor from issuing a bankruptcy petition?

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Produced in partnership with XXIV Old Buildings
Published on LexisPSL on 06/04/2018

The following Restructuring & Insolvency Q&A produced in partnership with XXIV Old Buildings provides comprehensive and up to date legal information covering:

  • Following obtaining a money judgment, if an order is granted by the court in relation to a general stay on execution (pending the outcome of an application to set aside the judgment) will this prevent the judgment creditor from issuing a bankruptcy petition?

Following obtaining a money judgment, if an order is granted by the court in relation to a general stay on execution (pending the outcome of an application to set aside the judgment) will this prevent the judgment creditor from issuing a bankruptcy petition?

Leaving aside technical definitions of what constitutes ’execution’, it is counterintuitive that a person could be made bankrupt on a judgment debt upon which execution has been stayed. On one view bankruptcy itself is a species of execution. ’Execution’ means…the process for enforcing or giving effect to the judgment of the court…’ per Lord Denning in Re Overseas Aviation Engineering (G.B.). This view obtains indirect support from Bishopsgate v Maxwell (No 2) where the Court of Appeal stayed execution pending appeal but with an express exception for presentation of a bankruptcy petition. If a bankruptcy petition could normally be presented despite a stay of execution, there was no need for the express exception in the order.

However that may be, one of the basic requirements for a bankruptcy petition is that the debt must be one payable either immediately or at some certain future time (section 267(2)(b) of the Insolvency Act 1986 (IA 1986)). In the case of a judgment debt which has been stayed, there is no debt

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