The following Restructuring & Insolvency practice note produced in partnership with South Square Chambers provides comprehensive and up to date legal information covering:
The general rule as to what constitutes a provable debt in administration, winding-up and bankruptcy is set out in the IR 2016, SI 2016/1024, r 14.2(1) (replacing IR 1986, SI 1986/1925, r 12.3):
'All claims by creditors except as provided in this rule, are provable as debts against the company or bankrupt, whether they are present or future, certain or contingent, ascertained or sounding only in damages'.
This rule is complemented by section 322 of the Insolvency Act 1986 (IA 1986), which provides for proof of debts in bankruptcy, and IA 1986, s 382, which defines bankruptcy debts. It also needs to be read in light of IR 2016, SI 2016/1024, r 14.1 (replacing IR 1986, SI 1986/1925, r 13.12), which makes provision for 'debt,' ‘small debt’ and 'liability'.
These sections and rules together form the legislative basis for the definition of what constitutes a debt and what debts are provable in different forms of insolvency procedure. Note that an office-holder may treat small debts, currently those of £1,000 or less, as proved by a creditor without the creditor in fact submitting a proof for the purposes of declaring a dividend only (IR 2016, SI 2016/1024, rr 14.3, 14.29, 14.30, 14.31, replacing IR 1986, SI 1986/1925, r 2.72 and 2.95)
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