Query re petition for bankruptcy

debt_doctor

I have personally seen a few 'spite' petitions in the court over the years, one about 6 months ago went like this...........
My client purchased a business franchise, to cut a long story short, it didn't go well. The parent company claimed that my client owed them £35k.The company issued a creditors petition after they rejected the clients response to the stat demand. (I wasnt advising him at the stat demand stage).
At the creditors petition hearing it was pointed out that the client had no assets (house in neg equity, showed two indep. valuations) and was on JSA.
TBH becoming BR would have been no issue except that the client had just been appointed to a senior management new job (the new employer was aware of the issues here) but would not be appointed to the roll if he were BR,any other outcome was fine.
There was going to be considerable surplus income from this job, which would have allowed the debt to be paid in full in 3 years either by a DMP or by entering in to an IVA.
I might add that I was assisted by one of the finest insolvency solicitors in the Country, who himself is a Registrar sitting in the Royal Courts of Justice. (a Bankruptcy Judge).
The creditor simply was not interested. They became well aware that BR would give them nothing and an IVA would get them paid in full.
The District Judge was interested in two things only;
Is it proven that the defendant owes the money?
and
Is the defendant insolvent?
The DJ stamped the Bankruptcy Order.

If you are trying to stop a petition on the basis of offering payments, then it is the CREDITOR you need to persuade not the DJ as the remit of the DJ is a fairly simple one, as above.

Thankfully, most creditors want whats financially best for them, and I (and my colleagues) have helped dismiss countless stat demands and a fair few creditors petitions by reasoned argument.

DD

debt_doctor

alastairq wrote: »

If this is the case, what sorts of grounds would compel a Judge to refuse a creditor's petition?

Generally a refusal would revolve around the issue of proving liability for the debt and whether the defendant was insolvent (dismissing a debtors petition is so rare it's not worth thinking about)
So liability - If there is an exisiting CCJ then that would be accepted as total liability. If the defendant felt that the CCJ was wrongly obtained (for instance the debt was already stat barred at the time of the CCJ) then the best course of action would be to try to set aside the CCJ and if neccessary ask for a stay on the petition / stat demand.
other grounds are;
There is a substantial dispute about the monies said to be owed.
The defendant has a cross claim against the claimant that equals or exceeds the value of the petition.
The creditor holds security of at least equal value to the petition claim.
On other grounds..... potentially Judges discretion, and it is not impossible that a DJ MIGHT allow instalments over a short period of time, but rare.

DD

alastairq

Thanks for that, guys....between you , many of the questions that arise on here have been answered in one go!

perhaps someone could make parts of this thread a stickie for easy reference?

debtinfo

debt_doctor wrote: »

On other grounds..... potentially Judges discretion, and it is not impossible that a DJ MIGHT allow instalments over a short period of time, but rare.

DD

Exactly, most of the ones i have seen, the judge has kept the petition live during the period of payment, so for instance the judge might say that they will adjourn the case for say 2 or 3 months and would want the debt paid in that time

andyuk101_2

debt_doctor wrote: »

I have personally seen a few 'spite' petitions in the court over the years, one about 6 months ago went like this...........
My client purchased a business franchise, to cut a long story short, it didn't go well. The parent company claimed that my client owed them £35k.The company issued a creditors petition after they rejected the clients response to the stat demand. (I wasnt advising him at the stat demand stage).
At the creditors petition hearing it was pointed out that the client had no assets (house in neg equity, showed two indep. valuations) and was on JSA.
TBH becoming BR would have been no issue except that the client had just been appointed to a senior management new job (the new employer was aware of the issues here) but would not be appointed to the roll if he were BR,any other outcome was fine.
There was going to be considerable surplus income from this job, which would have allowed the debt to be paid in full in 3 years either by a DMP or by entering in to an IVA.
I might add that I was assisted by one of the finest insolvency solicitors in the Country, who himself is a Registrar sitting in the Royal Courts of Justice. (a Bankruptcy Judge).
The creditor simply was not interested. They became well aware that BR would give them nothing and an IVA would get them paid in full.
The District Judge was interested in two things only;
Is it proven that the defendant owes the money?
and
Is the defendant insolvent?
The DJ stamped the Bankruptcy Order.

I remember reading somewhere a business can offset the costs of recovery and the debt against their tax liability in certain situations, until the debt is written off (through BR in this case) the business cant offset it (ie still sits on the balance sheet)

So it may not be out of spite but on the advice of the accountant

Not that this helps the OP but may explain why some companies attempt to recover plainly unrecoverable debts

StellaArtois

poppasmurf_bewdley wrote: »

Have you EVER come across a Debt Collection Company that will spend circa £1400 to collect a £1500 debt?

don't they usually pass instructions on to their solicitors who then make you pay all the costs

my debt of 7000 was increased to 8000 after they made the petition against me as it seems I am paying the costs of the petition and everything else and they're within their rights to do so it seems

poppasmurf_bewdley

StellaArtois wrote: »

don't they usually pass instructions on to their solicitors who then make you pay all the costs

my debt of 7000 was increased to 8000 after they made the petition against me as it seems I am paying the costs of the petition and everything else and they're within their rights to do so it seems

But if they make you bankrupt, how do they get their money from you?

StellaArtois

poppasmurf_bewdley wrote: »

But if they make you bankrupt, how do they get their money from you?

In my case sadly my house as if they're successful I will be homeless

walker123

Okay, some more help required ... I have received this email from them today:

"
Further to your letter dated 20th April (received 30th April) the contents of which have been noted.





As advised previously, our client has this debt insured and will receive 80% of the balance if they can demonstrate they have tried all angles to recover the debt which will include a Bankruptcy Petition being presented. Therefore any offer other than payment in full will be rejected forthwith.



The disbursements to present the petition currently sit in our client and account and as soon as the court date is set, a cheque will be issued to the court.



Should you wish to make an offer in the interim, I will take further instruction from my client."

What should I say to them?