- Bankruptcy petitions—independent and unqualified obligations (Mulville v Sandelson)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Restructuring & Insolvency analysis: A settlement deed provided for the payment by Mr Sandelson of £1.25m to Ms Mulville as a settlement sum. Several obligations would have arisen upon receipt of the settlement sum, but it was never paid. Ms Mulville therefore presented a bankruptcy petition against Mr Sandelson. The question for the court was whether the obligation to pay the settlement sum was independent and unqualified—if not, it could not form the basis of the petition. Roth J held that it was an independent obligation: payment of the settlement sum was a discrete obligation which had to be fulfilled first, and within 21 days of the agreement. The case demonstrates the importance of careful drafting—it should be made clear that an obligation to pay is conditional, or else non-payment can give rise to insolvency proceedings. Written by Karl Anderson, barrister, at 4 Stone Buildings.
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