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LPC Law Notes > Business Law and Practice Notes
A more recent version of these Personal Insolvency notes – written by Cambridge And Oxilp And College Of Law students – is available here.
The following is a more accessble plain text extract of the PDF sample above, taken from our Business Law and Practice Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
Core Module: BLP Paper B
Partnerships Personal Insolvency 2 options for a person / partnership that is insolvent (i.e. has no more money - cannot continue to do business):
1. Bankruptcy
2. Individual Voluntary arrangement (IVA)
Bankruptcy Definition: Court order that declares a person to be insolvent. He is unable to pay his debts / has no reasonable prospect of paying his debts when they fall due. Bankruptcy vests property in a trustee for distribution. At the end of one year the debtor is released from liability.
Procedure:
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Creditor's petition: must show that a) Debt of at least PS750 (liquidated and unsecured) b) Debtor appears to be unable to pay / no reasonable prospect of being able to pay (creditor mus serve statutory demand and it is unpaid after 3 weeks. There must also be no outstanding application to have statutory demand set aside); OR debtor has failed to satisfy execution of judgment debt. c) Debtor is domicile
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1 Petition is presented (i.e. filed in court) Petition served on debtor personally Hearing: est. 14 days after service Bankruptcy order given to debtor Debtor's petition: a) petition on grounds of inability to pay b) statement of affairs hearing of the debtor's petition Bankruptcy order made; OR court appoints insolvency practitioner to prepare report to consider IVA. Official Receiver (OR) appointed Trustee in bankruptcy appointed by creditors Property vests in trustee - (but there are exceptions - all things necessary for working /
living; Also - if the house is jointly owned then trustee only holds bankrupt's share; Spouse will also have a right of occupancy in the family home S.30 Family Act. If the bankrupt lives with children under age of 18 then he may also have a right of occupancy under S.338 Insolvency Act. However, after 1 year the rights of creditors outweighs spouse's rights unless there are "exceptiona circumstances". Income Payments Order & agreements: Trustee can apply to court for an income order (so trustee gets bankrupt's income also) but court must leave enough for reasonable needs. This
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