Q&As

What test must be applied by a trustee in bankruptcy in assessing whether a creditor’s claim is a real debt? Is a liquidator obliged to adjudicate on a proof of debt before they know that a dividend is likely?

read titleRead full title
Published on LexisPSL on 01/02/2018

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • What test must be applied by a trustee in bankruptcy in assessing whether a creditor’s claim is a real debt? Is a liquidator obliged to adjudicate on a proof of debt before they know that a dividend is likely?
  • Real debt
  • Proof of debt
  • Office holders
  • Balance of probabilities
  • Future debts
  • Timing

What test must be applied by a trustee in bankruptcy in assessing whether a creditor’s claim is a real debt? Is a liquidator obliged to adjudicate on a proof of debt before they know that a dividend is likely?

Real debt

Proof of debt

A party wishing to file their debt in a compulsory liquidation, administration or bankruptcy must submit a written claim to the liquidator, administrator or trustee in bankruptcy. A creditor, who's claim is referred to as 'proving' for their debt, and the document by which they seek to establish their claim is called their ‘proof’. For further reading on proving in an insolvency, see Practice Note: Proof of debt—the position under the Insolvency (England and Wales) Rules 2016.

An office holder is under a duty to ascertain and discharge the liabilities of the company or bankrupt in so far as there are net realisations to do so (Re Armstrong-Whitworth Securities). If possessing evidence of additional potential claims against the company or bankrupt, the office holder should actively ascertain whether contingent creditors intend to prove and set aside any provisions as necessary (Austin Securities v Northgate & English Stores).

Office holders

Office holders must endeavour to ascertain all the debts and liabilities of the company or individual, and they must deal with all the proofs of debt submitted to them by admitting them or rejecting them or requiring

Related documents:

Popular documents