Bankruptcy is not a life sentence. However, as a High Court case showed, for those suspected of being less than forthcoming about their assets or otherwise failing to cooperate with their trustees in bankruptcy it can sometimes feel like one.
The case concerned a businessman (the debtor) who was made bankrupt as long ago as 2017. His unsecured creditors had submitted proofs in the bankruptcy amounting to more than £14 million. Debtors are generally entitled to be discharged from bankruptcy after one year. However, in his case, that had not happened.
That was because the debtor’s trustee in bankruptcy had obtained a succession of judicial orders suspending his discharge from bankruptcy on the basis that he had failed to provide her with information she reasonably required in order to perform her function of gathering in funds for the benefit of his creditors.
The trustee wished to discover more about the nature of the debtors involvement with certain businesses, the assets of a trust, how he was funding his current lifestyle and details of what had happened to specific assets he was said to have owned prior to his bankruptcy, including some number plates and watches.
Granting a further suspension of the discharge of the bankruptcy order due to expire on the fifth anniversary of his bankruptcy, the Court found that, in at least some significant respects, there were substantial grounds to suggest that the debtor had still not done all he reasonably could to fulfil his obligation to comply with the trustee's information requests.
The Court acknowledged that it was a complex case and that the trustee's extensive inquiries had been burdensome for the debtor. Given the length of time he had remained an undischarged bankrupt, the suspension was kept relatively short and the case would moving forward be the subject of proactive judicial oversight.
Obtaining a discharge would, however, require the debtor to reasonably cooperate with the trustee in providing the documentation and information sought. The debtor was warned that, even after his discharge, he would remain under a statutory obligation to provide information to the trustee that she reasonably required.
It is vital to seek expert legal advice as early as possible regarding insolvency matters. Contact Leanne Schneider-Rose l.schneider-rose@sydneymitchell.co.uk 0121 698 2200 for assistance.
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