Annulment of bankruptcy order refused

Published on
1 min read

In a recent appeal, the court upheld the decision of a district judge refusing to annul a bankruptcy order under section 282(1)(a) of the Insolvency Act 1986.

Initially, the district judge had accepted that the bankruptcy order ought not to have been made, because the debt was in fact wholly disputed. The debtor argued that this meant that an annulment should have been refused only in exceptional circumstances.

On appeal, the court rejected this argument. Judge Mohyuddin QC held that, even where there was no debt (because for example it was disputed), the court retained discretion whether or not to annul.

In exercising that discretion, the district judge had correctly taken into account relevant factors including the debtor's conduct, possible grounds for further investigations by the trustee in bankruptcy and whether the debtor was, in any event, insolvent.

The court also held that the judge had been right to take into account the fact that the consequence of annulment would be to "wipe away" the effect of the bankruptcy such that time would have been deemed to continue to run, and creditors' claims could now be time-barred.

Khan v Singh-Sall and another, (2022) EWHC 1913 (Ch)

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