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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

23 NOV 2012

Bankruptcy applications: determination by adjudicators - draft legislation

Following on from the post yesterday I thought it might be helpful to readers if they had a copy of the draft legislation. Here it is:

63 Bankruptcy applications: determination by adjudicators

(1)In Part 14 of the Insolvency Act 1986 (public administration (England and
Wales)), before section 399 and the cross-heading which precedes it insert—

Adjudicators

398A Appointment etc of adjudicators and assistants

(1)The Secretary of State may appoint persons to the office of adjudicator.

(2)A person appointed under subsection (1)

(a)is to be paid out of money provided by Parliament such salary
as the Secretary of State may direct,

(b)holds office on such other terms and conditions as the Secretary
of State may direct, and

(c)may be removed from office by a direction of the Secretary of
State.

(3)A person who is authorised to act as an official receiver may not be
appointed under subsection
(1).

(4)The Secretary of State may appoint officers of the Secretary of State’s
department to assist adjudicators in the carrying out of their functions.”

(2)In Part 9 of that Act (bankruptcy), before Chapter 1 insert the Chapter set out
in Schedule 18 (adjudicators: bankruptcy applications by debtors and
bankruptcy orders).

(3)Schedule 19 (adjudicators: minor and consequential amendments) has effect.

 

SCHEDULE 18

Adjudicators: bankruptcy applications by debtors and bankruptcy orders

Chapter A1

10Adjudicators: bankruptcy applications by debtors and bankruptcy orders

263H Bankruptcy applications to an adjudicator

(1)An individual may make an application to an adjudicator in
accordance with this Chapter for a bankruptcy order to be made
against him or her.

(2)An individual may make a bankruptcy application only on the
ground that the individual is unable to pay his or her debts.

263I Debtors against whom an adjudicator may make a bankruptcy order

(1)An adjudicator has jurisdiction to determine a bankruptcy
application only if—

(a)the centre of the debtor’s main interests is in England and
Wales, or

(b)the centre of the debtor’s main interests is not in a member
state of the European Union which has adopted the EC
Regulation, but the test in subsection
(2) is met.

(2)The test is that—

(a)the debtor is domiciled in England and Wales, or

(b)at any time in the period of three years ending with the day
on which the application is made to the adjudicator, the
debtor—

(i)has been ordinarily resident, or has had a place of
residence, in England and Wales, or

(ii)has carried on business in England and Wales.

(3)The reference in subsection (2) to the debtor carrying on business
includes—

(a)the carrying on of business by a firm or partnership of which
the debtor is a member, and

(b)the carrying on of business by an agent or manager for the
debtor or for such a firm or partnership.

(4)In this section, references to the centre of the debtor’s main interests
have the same meaning as in Article 3 of the EC Regulation.

263J Conditions applying to bankruptcy application

(1)A bankruptcy application must include—

(a)such particulars of the debtor’s creditors, debts and other
liabilities, and assets, as may be prescribed, and

(b)such other information as may be prescribed.

(2)A bankruptcy application is not to be regarded as having been made
unless any fee or deposit required in connection with the application
by an order under section 415 has been paid to such person, and
within such period, as may be prescribed.

(3)A bankruptcy application may not be withdrawn.

(4)A debtor must notify the adjudicator if, at any time before a
bankruptcy order is made against the debtor or the adjudicator
refuses to make such an order—

(a)the debtor becomes able to pay his or her debts, or

(b)a bankruptcy petition has been presented to the court in
relation to the debtor.

263K Determination of bankruptcy application

(1)After receiving a bankruptcy application, an adjudicator must
determine whether the following requirements are met—

(a)the adjudicator had jurisdiction under section 263I to
determine the application on the date the application was
made,

(b)the debtor is unable to pay his or her debts at the date of the
determination,

(c)no bankruptcy petition is pending in relation to the debtor at
the date of the determination, and

(d)no bankruptcy order has been made in respect of any of the
debts which are the subject of the application at the date of
the determination.

(2)If the adjudicator is satisfied that each of the requirements in
subsection
(1) are met, the adjudicator must make a bankruptcy
order against the debtor.

(3)If the adjudicator is not so satisfied, the adjudicator must refuse to
make a bankruptcy order against the debtor.

(4)The adjudicator must make a bankruptcy order against the debtor or
refuse to make such an order before the end of the prescribed period
(“the determination period”).

263L Adjudicator’s requests for further information

(1)An adjudicator may at any time during the determination period
request from the debtor information that the adjudicator considers
necessary for the purpose of determining whether a bankruptcy
order must be made.

(2)The adjudicator may specify a date before which information
requested under subsection
(1) must be provided; but that date must
not be after the end of the determination period.

(3)If the rules so prescribe, a request under subsection (1) may include
a request for information to be given orally.

(4)The rules may make provision enabling or requiring an adjudicator
to request information from persons of a prescribed description in
prescribed circumstances.

263M Making of bankruptcy order

(1)This section applies where an adjudicator makes a bankruptcy order
as a result of a bankruptcy application.

(2)The order must be made in the prescribed form.

(3)The adjudicator must—

(a)give a copy of the order to the debtor, and

(b)give notice of the order to persons of such description as may
be prescribed.

263N Refusal to make a bankruptcy order: review and appeal etc.

(1)Where an adjudicator refuses to make a bankruptcy order on a
bankruptcy application, the adjudicator must give notice to the
debtor—

(a)giving the reasons for the refusal, and

(b)explaining the effect of subsections (2) to (5).

(2)If requested by the debtor before the end of the prescribed period, the
adjudicator must review the information which was available to the
adjudicator when the determination that resulted in the refusal was
made.

(3)Following a review under subsection (2) the adjudicator must—

(a)confirm the refusal to make a bankruptcy order, or

(b)make a bankruptcy order against the debtor.

(4)Where the adjudicator confirms a refusal under subsection (3), the
adjudicator must give notice to the debtor—

(a)giving the reasons for the confirmation, and

(b)explaining the effect of subsection (5).

(5)If the refusal is confirmed under subsection (3), the debtor may
appeal against the refusal to the court before the end of the
prescribed period.

263OFalse representations and omissions

(1)It is an offence knowingly or recklessly to make any false
representation or omission in—

(a)making a bankruptcy application to an adjudicator, or

(b)providing any information to an adjudicator in connection
with a bankruptcy application.

(2)It is an offence knowingly or recklessly to fail to notify an adjudicator
of a matter in accordance with a requirement imposed by or under
this Part.

(3)It is immaterial for the purposes of an offence under this section
whether or not a bankruptcy order is made as a result of the
application.

(4)It is not a defence in proceedings for an offence under this section
that anything relied on, in whole or in part, as constituting the
offence was done outside England and Wales.

(5)Proceedings for an offence under this section may only be
instituted—

(a)by the Secretary of State, or

(b)by or with the consent of the Director of Public Prosecutions.”

Section 63(3)

SCHEDULE 19: Adjudicators: minor and consequential amendments

 

1 The Insolvency Act 1986 is amended in accordance with this Schedule.

2 In section 253 (application for interim order), omit subsection (5).

3 In section 255 (cases in which interim order can be made), in subsection
(1)(b) for “petition for his own bankruptcy” substitute “make a bankruptcy
application”.

4 (1)Section 256A (debtor’s proposal and nominee’s report) is amended as
follows.

(2)In subsection (1) omit the words from “unless” to the end.

(3)In subsection (3) for “petition for his own bankruptcy” substitute “make a
bankruptcy application”.

5 For the heading to Chapter 1 of Part 9 substitute “The court: bankruptcy
petitions and bankruptcy orders”.

6 In section 264 (who may present a bankruptcy petition), in subsection (1)
omit paragraph (b).

7 For section 265 (conditions to be satisfied in respect of debtor) substitute—

“265Creditor’s petition: debtors against whom the court may make a
bankruptcy order

(1)A bankruptcy petition may be presented to the court under section
264(1)(a) only if—

(a)the centre of the debtor’s main interests is in England and
Wales, or

(b)the centre of the debtor’s main interests is not in a member
state of the European Union which has adopted the EC
Regulation, but the test in subsection
(2) is met.

(2)The test is that—

(a)the debtor is domiciled in England and Wales, or

(b)at any time in the period of three years ending with the day
on which the petition is presented, the debtor—

(i)has been ordinarily resident, or has had a place of residence, in England and Wales, or

(ii)has carried on business in England and Wales.

(3)The reference in subsection (2) to the debtor carrying on business
includes—

(a)the carrying on of business by a firm or partnership of which
the debtor is a member, and

(b)the carrying on of business by an agent or manager for the
debtor or for such a firm or partnership.

(4)In this section, references to the centre of the debtor’s main interests
have the same meaning as in Article 3 of the EC Regulation.”

8 In section 266 (bankruptcy petitions: other preliminary conditions), in
subsection (4) omit “, (b)”.

9(1) Sections 272 to 274A (and the cross-heading immediately preceding those
sections) (debtor’s petition) are repealed.

(2)In consequence of the repeal of section 274A by paragraph (1), omit
paragraph 3 of Schedule 20 to the Tribunals, Courts and Enforcement Act
2007 (debt relief orders: consequential amendments).

10 For the cross-heading immediately before section 278 substitute—

Chapter 1A

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