Bankruptcy

1. Creditor's Petition

A creditor's petition may only be presented if:

• (a) The petition is in respect of a debt, or debts, owed by the debtor to the creditors),
• (b) At the time it is presented:

(i) The amount of the debt, or the aggregate amount of the debt, is at least the bankruptcy level (£750);

(ii) The debt, or each of the debts, is for a liquidated sum payable to the creditor(s) either immediately or at some certain future time, and is unsecured (this condition may be waived in certain circumstances);

(iii) The debt, or each of the debts, is a debt which the debtor appears either to be unable to pay or to have no reasonable prospect of being able to pay; and

(iv) There is no outstanding application by the debtor to set aside a statutory demand served by the creditor in respect of the debt or any of the debts.

A debtor is deemed to be unable to pay a debt only if the debt is payable immediately and either:

(a)

• The creditor to whom the debt is owed has served on the debtor a demand in the prescribed form requiring him to pay the debt or to secure or compound for it to the satisfaction of the creditor
• At least three weeks have elapsed since the demand was served
• And the demand has not been complied with or set aside;

OR

(b)

• A judgment or court order in favour of the creditor(s), in respect of the debt, has not been complied with.

A debtor is deemed to have no reasonable prospect of being able to pay a debt only if the debt is not immediately payable and

• The creditor has served on the debtor a demand in the prescribed form requiring him to establish to the satisfaction of the creditor that there is a reasonable prospect that the debtor will be able to pay the debt when it falls due.
• At least three weeks have elapsed since the demand was served.
• And the demand has not been complied with or set aside.

A petition may be presented before the end of the three week time limits mentioned above if there is a serious possibility that the value of the debtor's property will be significantly diminished during that period and the petition contains a statement to that effect. However, the court will not make an order until the time limit has expired.

Creditor's Petition - Procedure

The court will not make a bankruptcy order on a creditor's petition unless it is satisfied that the debt, or one of the debts, on which the petition was presented was either:

• (a) A debt, payable at the date of the petition or which has since become payable, which has not been paid, secured or compounded for; or
• (b) A debt which the debtor has no reasonable prospect of being able to pay when it falls due.

The court may dismiss the petition if it is satisfied the debtor is able to pay all his debts (taking into account both his contingent and prospective liabilities) or is satisfied

• (a) That the debtor has made an offer to secure or compound for a debt in respect of which the petition is presented;
• (b) That the acceptance of the offer would have required the dismissal of the petition; and
• (c) That the offer has been unreasonably refused.