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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

Guildhall Chambers , 03 MAR 2015

Pathania v Adedeji [2014] EWCA Civ 681

Pathania v Adedeji [2014] EWCA Civ 681
(Court of Appeal, Maurice Kay, Rafferty and Floyd LJJ, 21 May 2014)

The making of a bankruptcy order did not have the effect of depriving the bankrupt of a cause of action against a third party as his estate had not vested in the Official Receiver at the time at which judgment had been entered against the third party.

Mr Pathania (‘P’) obtained judgment against Mr Adedeji (‘A’) in respect of a loan. Prior to judgment being entered, P was declared bankrupt. A argued in the Court of Appeal that P’s bankruptcy had divested him of his cause of action and that the judgment should be set aside accordingly.

The Court of Appeal rejected A’s argument and held that although the Official Receiver (‘O/R’) became the receiver and manager of the bankrupt’s estate upon the making of the bankruptcy order (s 287 IA), the estate had not vested in the O/R at the time at which judgment was entered. Accordingly P had not been divested of his cause of action prior to judgment being entered in his favour. Further, even if the estate had so vested, it would have been necessary for A to show that P was aware that it had.

Accordingly, the Appeal was dismissed.
Guildhall Chambers
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