Can a bankrupt apply to set aside a statutory demand?

A bankrupt applied to set aside a statutory demand based on a debt due under a guarantee (application). The application was dismissed by the district judge and a bankruptcy order made in respect of the debt.

The bankrupt applied for permission to appeal the district judge’s order and permission to pursue that appeal was granted by a High Court judge, albeit it does not appear that the judge was aware of the intervening bankruptcy order.

The creditor objected to the appeal on the grounds that the bankrupt had no standing to pursue the application as it vested in his bankruptcy estate and, in any event, the bankrupt had no grounds in support of the application.

The judge approached matters the other way round and determined the application on its merits and dismissed the appeal.

The judge then considered whether, in any event, the bankrupt had standing to bring the application post-bankruptcy or whether the application vested in his bankruptcy estate. Whilst it did not help the bankrupt in this case, the judge decided that the application was personal to the bankrupt as service of a statutory demand is a necessary pre-cursor to the making of a bankruptcy order, which inevitably changes the status of an individual. 

In addition, the application and right to appeal is not something that can enure for the benefit of the bankruptcy estate and success of the application could lead to an annulment of the bankruptcy.

For those, and other reasons, the judge held that the bankrupt did have standing to pursue the application and the appeal, but the appeal was dismissed on its merits.

Addison v London European Securities Limited [2022] EWHC 191 (Ch)

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