After a debtor's application to set aside a statutory demand was dismissed, and the Court did not order a specific period before which a Bankruptcy Petition could be presented, a creditor is not necessarily prohibited from presenting a Bankruptcy Petition immediately.
Under the Insolvency Rules 1986 (the "1986 Rules"), a debtor may make an application to set aside a statutory demand served on him. If that application is not successful, the Court must make an Order authorising the creditor to present a Bankruptcy Petition either as soon as reasonably practicable or by such other date as the Court specifies (r. 6.5(6), 1986 Rules).
This case involved the appeal by a debtor ("Darbyshire") against whom a bankruptcy order was made in favour of the respondent petitioners ("Turpin/Phillips").
Darbyshire's application to set aside a statutory demand had been dismissed by his local County Court. That Court did not specify the date from which Turpin/Phillips could present the Bankruptcy Petition, as required by r. 6.5(6) of the 1986 Rules. In any event, the Petition was presented the following day, and Darbyshire was subsequently adjudged bankrupt by the District Judge.
At that hearing, the District Judge did not deal with this alleged procedural defect in the Petition. Darbyshire was not present at the hearing and had not filed a statement of truth. The District Judge summarily dismissed Darbyshire's assertion that he had cross-claims which could extinguish the debt (as he had not filed a statement of truth and was not present), and rejected his request for an adjournment.
On appeal, Darbyshire submitted, inter alia, that there was a procedural defect in the Petition pursuant to r. 6.5(6) of the 1986 Rules and accordingly the petition was flawed and should not have been made.
The High Court held that the purpose of r. 6.5(6) of the 1986 Rules is to allow a debtor the opportunity to ask for more time to pay the debt before the creditor is permitted to present a Bankruptcy Petition. The default position in the absence of any request by a debtor for more time was to authorise the presentation of a Petition forthwith. If there were no date for the presentation of a petition specified in the order as required by r.6.5(6) of the 1986 Rules, then that did not necessarily prohibit a creditor from presenting a Petition forthwith.
The appeal was allowed but on a separate issue.
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