Court practice unlawful

Halabi (a bankrupt) v Camden LBC and another Ch D TLR 25 March

Section 282(1)(b) of the Insolvency Act 1986 and r 6.211(2) of the Insolvency Rules 1986 are very clear and provide that the bankruptcy debts and expenses of the bankruptcy have to have been paid, and that all bankruptcy debts which had been proved have to have been paid in full, before a bankruptcy order can be annulled. The problem is that until the bankruptcy order has been annulled, the money is not available to discharge the debts and expenses. Some county courts have adopted the expedient of annulling a bankruptcy order on the basis of an undertaking from the bankrupt’s solicitor to pay the debts, costs and expenses of the bankruptcy. This practice is not followed in the High Court Registry and is not within the jurisdiction of the court. An acceptable practice is for the court to annul the bankruptcy order subject to a direction that it shall not take effect until a later date to enable the debts, costs and expenses to be paid in full before then.