- Intervening bankruptcy prevents decision on third party debt orders (Michael Wilson v Sinclair)
- What was the background to the case?
- What did the Court of Appeal decide?
- What are the implications of the decision?
- Case details
Restructuring & Insolvency analysis: The judgments at first instance held that a third party debt order (TPDO) must be discharged where the debt is payable on demand but no demand has been served. This is a matter of general importance to creditors seeking to enforce judgments. It was hoped that the Court of Appeal would give an authoritative ruling on the point, but the judgment debtor had been made bankrupt shortly before the hearing in the Court of Appeal. The result was that the judgment creditor lost his standing to pursue the TPDO. The case highlights a potential serious weakness in the TPDO regime, which is that if the judgments at first instance are correct, a judgment creditor cannot obtain a TPDO in respect of a debt payable on demand until the judgment debtor has made demand. The case also shows that it will be very difficult to persuade the court to exercise its discretion to allow judgment creditors with partly-completed attachments to retain the benefit of them against the trustee in bankruptcy and the general body of creditors. It highlights the risk for judgment creditors of trying to pursue inconsistent enforcement procedures. Written by Harriet Hartshorn and Steven Fennell, barristers at Exchange Chambers.
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