Sharon Auton, who leads the TSP Dispute Resolution team discusses the changes to bankruptcy procedures.
From 6 April 2016, debtors are no longer able to petition the court for their own bankruptcy. Instead, debtors must make an online application to an adjudicator (a government official employed by the Insolvency Service). If a debtor’s application provides all the prescribed information, and is considered appropriate, the adjudicator will make a bankruptcy order pursuant to its statutory jurisdiction. Although the adjudication procedure is an administrative rather than judicial process, the resulting bankruptcy order has the same statutory force under the Insolvency Act 1986.
The new procedure removes the courts from the mechanics of making a debtor’s bankruptcy order. However, the courts have retained their general jurisdiction over all bankruptcy proceedings commenced following the adjudicator’s bankruptcy order, including a rescission or annulment application, and will also hear any appeal from the adjudicator’s decision to refuse to make a bankruptcy order.
The remainder of the bankruptcy process, following the making of the bankruptcy order and handover of the bankruptcy file to the Official Receiver, is substantively unchanged, as are the procedures for presenting a creditor’s bankruptcy petition.
The concept of removing the courts from the process of making a bankruptcy order on a debtor’s petition was originally introduced in a consultation published in November 2007 and refined in a number of subsequent consultations. The traditional role of the court in most areas of civil law is to hear applications and resolve disputes. Until 6 April 2016, all petitions for bankruptcy had to be presented to the court even when the debtor was the applicant and there was no dispute that they were unable to pay their debts. The new application process has been made simpler and designed so that an application cannot be formally made without payment of the fees (save that the Official Receiver’s fees can be paid in instalments) and submission of properly completed forms. It is also cheaper for debtors: there is no court fee and the debtor’s application fee payable to the adjudicator is £130 (rather than the previous £180 court fee). The deposit payable for the Official Receiver’s fee of £525 has remained the same and the overall Official Receiver’s case administration fee (for which the £525 deposit is security) remains at £1,990.
How does a debtor make a bankruptcy application?
For more information on the subject Sharon can be contacted on 01206 217043 or by email at email@example.com.