Jurisdiction threshold for English bankruptcy

A creditor petitioned for a debtor’s bankruptcy and the debtor disputed the jurisdiction of the English court to make the order.

The court was required to consider the jurisdictional test in section 265 of the Insolvency Act, specifically the test of whether at any time in the period of three years ending with the date of presentation of the petition the debtor had carried on business in the jurisdiction.

The court found that he was involved in the letting of certain English property during the relevant period on the basis of the following evidence:

  1. the debtor was named in the tenancy agreement, albeit along with his wife;
  2. there was strong, if not conclusive, evidence that the debtor received the rental income from the tenants shortly after his wife's bankruptcy (on her own application) on 20 August 2021;
  3. the debtor commenced court proceedings against the tenants for unpaid rent for the period 1 March 2019 to February 2022.

The next question was whether this letting amounted to the carrying on of business. The judge stated that he hesitated to attempt a definition of "business" or "carrying on business" but he found that as a matter of ordinary sense the letting of property in the instant case did amount to carrying on the business.

Accordingly the court held that it had jurisdiction to make a bankruptcy order.

Durkan and Long Compton v Nicholas Mark Jones, Deputy ICC Judge Baister, 13 June 2023

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