Bankruptcy petitions: class considerations and collateral purpose

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2 min read

Mr Justice Snowden heard two petitions for a bankruptcy order to be made in respect of Glenn Maud. The first petition was presented by the Libyan Investment Authority (LIA) in 2014, and the second was presented by Edgeworth Capital (Luxembourg) SARL (Edgeworth) in 2015. After the petitions were presented, substantial litigation followed, which delayed their being heard.

The hearing, that took place in February 2019, raised a number of interesting legal points about bankruptcy petitions, including whether, in the face of opposition for a creditor, the court had to dismiss the petition, and whether a bankruptcy order could be made where the petition had a clear collateral purpose.

Snowden J held that the LIA should be considered first, it having been presented earlier than the Edgeworth petition. There were two substantive issues to be considered. Firstly, was it appropriate to make a bankruptcy order having regard to the view of the general body of creditors. Secondly, should the court decline to make a bankruptcy order as it would serve no useful purpose.

In relation to the first question, the class question, Snowden J held that making a bankruptcy order was appropriate. The LIA, as petitioner, and Edgeworth, as supporting creditor, were the majority in number and by value of debt in seeking Mr Maud’s bankruptcy. Further, Navarro had no rational reason for opposing the petition, and there was no prospect of the debt being paid in a reasonable time. As such, the court could use its discretion to make the order, notwithstanding Navarro’s opposition.

Whilst Mr Maud had advanced an argument that no useful purpose could be achieved by making him bankrupt, he had not adduced evidence sufficient to demonstrate that he had no assets and that an investigation of his estate would be without benefit. In the circumstances, it was appropriate to make a bankruptcy order.

Notwithstanding that the court could make an order on the LIA petition, Snowden J considered the Edgeworth petition. He found that a bankruptcy order could have been made in respect of that petition also.

As noted above, Mr Maud argued that the petition was an abuse of process because it was being brought for a collateral purpose. Snowden J found that whilst Edgeworth’s focus was to acquire the complex in Spain, it still intended to recover sums owed by Mr Maud through the bankruptcy process. Further, Snowden J was not persuaded that in achieving its collateral purpose, Edgeworth would have caused any material detriment to the general body of Mr Maud’s creditors.

The petitions were adjourned to a further, consequential hearing.

In the matter of Glenn Maud
Edgeworth Capital (Luxembourg) Sarl and Libyan Investment Authority v Glenn Maud
[2020] EWHC 974 (Ch)

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