Bankruptcy

Bankruptcy is an insolvency process for individuals, which commences on the day the bankruptcy order is made.

As per Lord Justice David Richards in Azuonye v Kent (in her capacity as trustee of the bankrupt estate of the appellant) [2019] EWCA Civ 1289, [2019] All ER (D) 123 (Jul) at para [8]:

In the very broadest of terms, the purpose of bankruptcy is to provide protection to the bankrupt against the claims of creditors in respect of debts and liabilities as at the commencement of the bankruptcy and to realise the property owned by the bankrupt as at that date and distribute the realised proceeds among those creditors.

Until 6 April 2016, unlike its corporate equivalent liquidation, only the court could make an individual bankrupt. However, on 6 April 2016, the bankruptcy applications regime came into force replacing debtors' bankruptcy petitions (but not creditors' petitions), meaning that any individual who wishes to be made bankrupt must make a bankruptcy application which is determined by an adjudicator, and not by the court.

The making of a bankruptcy order—whether by the court or by the adjudicator—will free the debtor