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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

27 MAY 2011

Four time bankrupt - is regime tough enough?

The Insolvency Service (IS) have published an interesting press release which details the activities of a debtor who has been declared bankrupt four times. This does raise the question of whether the regime is tough enough, i.e. should more serious consequences have flowed from the third bankruptcy? The creditors of that bankruptcy and the fourth bankruptcy might certainly think so. Here are the details from the story:

"A four-time bankrupt, Darran Anthony Matthews, was last week sentenced to 24 weeks imprisonment by Southampton Magistrates’ Court following an investigation and prosecution by the Insolvency Service and the Department for Business, Innovation and Skills.

Matthews, a farmer of Sherbourne in Dorset, who had already had his discharge from bankruptcy suspended indefinitely, was found guilty on four counts of obtaining credit without disclosing his bankrupt status.

In spite of a bankruptcy order against him in 2009, Mr Matthews obtained credit of almost £12,500 from four creditors without letting them know that he was a bankrupt, as he was required to do. The further debt incurred by Mr Matthews was in addition to the deficiency of nearly £22,500 in his bankruptcy. Mr Matthews has failed to pay any of these creditors.

In court, Mr Matthews pleaded guilty to four charges of obtaining credit without disclosing relevant information, contrary to s.360 of the Insolvency Act 1986. He was given a six-month sentence for each charge. The sentences are to run concurrently (i.e. at the same time).

Since he had been made bankrupt on three occasions prior to his latest bankruptcy, Mr Matthews must have been aware of the restrictions applicable to him as a bankrupt. In addition, these restrictions were reiterated to him by the Official Receiver in July 2009, prior to the suspension of his discharge from bankruptcy.

Commenting on the case Stephen Speed, Chief Executive of The Insolvency Service said:

“People struggling with debt who want to benefit from the debt relief arrangements offered by the insolvency regime must also be prepared to abide by the restrictions that come with that relief. Those who flout the terms of their bankruptcy orders must be prepared to face the consequences of such a decision, as Mr Matthews has found to his cost”.

Commenting on the case, Liam Mannall, an investigator with the Department for Business, Innovation and Skills said:

“Mr Matthews’ sentence sends a clear message to bankrupts who fail to keep to the terms of their bankruptcy order. We can and will investigate bankrupts, and where appropriate, take action when we find evidence of them deliberately acting to the determent of their creditors”.

Mr Matthews’ discharge from bankruptcy remains suspended indefinitely."

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