Issuing a Bankruptcy Petition
Bankruptcy petitions relate to individual (and not corporate) debtors.
As with Statutory Demands above, if you issue a bankruptcy petition against a debtor in respect of a disputed debt, then you risk them making an application to the Court to set aside your petition.
In these circumstances, if a debtor succeeds in setting your petition aside the you face the risk of paying the debtor's legal costs as well as your own and these can potentially run into thousands of pounds.
Whilst the current threshold for a bankruptcy petition is £750, it should be noted that the threshold is proposed to rise in October 2015 to £5,000.
The bankruptcy petition is commenced by issuing a statutory demand.
Once the statutory demand process has been run (and the demand has not been withdrawn or set aside) then you can commence bankruptcy proceedings.
The County Court closest to the debtor will hear the Bankruptcy petition and the debtor can contest the making of a Bankruptcy Order even if they have not applied to the Court to set aside the Statutory Demand. The debtor will usually be required to prove that the debt is disputed or that he has a counterclaim. The debtor can also ask for an adjournment of the hearing to grant a Bankruptcy Order to seek time to pay.
If a Bankruptcy Order is granted and a debtor is adjudged bankrupt then a trustee will be appointed to look at their financial affairs and make payments to creditors. The danger is that if a debtor genuinely cannot pay you, then ultimately you may have expended a significant amount in legal and court fees for no recovery.
Once we have had the opportunity to assess the case, we will provide the detailed guidance and advice on how best to proceed.
If you are looking to take out a Statutory Demand, Bankruptcy Petition or Winding Up Order, or have been served with one, then you should contact us.
With our Head Office based in Hull and two Consulting Offices in London and Leeds we are easily accessible for consultations. Call us on 01482 616 616 or 0800 037 1305 to book a free consultation to discuss your issues and requirements.