Annulment of Bankruptcy process

As explained in our main bankruptcy annulment page, it is possible to discharge your bankruptcy formally with the court subject to rule 6.206 of the Insolvency Rules 1986.   Here we explain more about the process

Bankruptcy Annulment explained

Where the application is made on the basis that the debts and expenses of the bankruptcy have been paid in full or have been secured for, there shall be set out in the statement or the fax by reference to which the Court is required to be satisfied before annulling the Bankruptcy Order.

A copy of the application and supporting witness statements shall be filed in Court. The Court then gives the Applicant notice of the venue fixed for the hearing. Once this date has been obtained, the Applicant shall give not less than 28 days notice of the hearing to the Official Receiver and the Trustee in Bankruptcy. The Applicant should also accompany this notice with copies of the application and the statement in support.

In response to the application, the Official Receiver or the Trustee in Bankruptcy will then prepare a report that must deal with the following matters:-

(a) the circumstances leading to the bankruptcy;

(b) the extent of the bankruptcy assets and liabilities at the date of the Bankruptcy Order and at the date of the present application;

(c) details of creditors (if any) who are known to him to have claims but have not proved; and

(d) such other matters as the person making the report considers to be, in the circumstances, necessary for the information of the Court.

The report will also include particulars of the extent (if any) to which, and the manner in which the debts and expenses of the bankruptcy have all been paid or secured. Insofar as debts and expenses are unpaid but secured, the Trustee shall state whether and to what extent he considers the security to be satisfactory.

A copy of this report is sent to the Applicant at least 14 days before hearing and after this the Applicant may, if he wishes, file further witness statement in answer to statements made in the report.

Where the Trustee reports that there are known creditors who have not proved, the Court may:

(a) direct the Trustee to send notice of the application to such of those creditors as the Court thinks ought to be informed of it, with a view to proving their debts (if they so wish) within 21 days; and

(b) direct the Trustee to advertise the fact that the application has been made so that creditors who have not proved may do so within the specified time; and

(c) adjourn the application meanwhile for any period not less than 35 days.

The Trustee in Bankruptcy or his representative is required to attend the hearing of the application to annul the bankruptcy.

If a debt is disputed or a creditor who has proved can no longer be traced, the bankrupt must have given such a security (in the form of money paid into Court, or a bond entered into with an approved surety) as the Court considers adequate to satisfy any sum that may subsequently be proved to be due to the creditor concerned and (if the Court thinks fit) costs.

Where security has been given in the case of untraced creditor, the Court may direct that particulars of the debt, and the security, being advertised in such a manner as it thinks fit. If the advertisement is ordered and no claim or security is made within 12 months from the date of the advertisement (or the first advertisement if more than one), the Court shall, on application in that behalf, order the security to be released.

The Official Receiver’s costs must be paid as part of the annulment.

The former bankrupt may require within 28 days of the Order that the Secretary of State give notice of the making of the Order:

(a) in the gazette; or

(b) in any newspaper in which the bankruptcy was advertised; or

(c) in both.

It is important to point out that an annulment is not automatic right, even if the debts of the bankruptcy have been paid. The granting of an annulment is at the discretion of the Court. The Court may refuse to grant the annulment if there is evidence that the bankrupt did not cooperate with their Trustee in Bankruptcy or has committed bankruptcy offences.

More on the positive effects of annulment.

How to apply for annument.

If your creditors have agreed to an individual voluntary arrangement (application under section 261 of the Insolvency Act 1986), these are the steps:

The insolvency practitioner nominated to deal with your case will call a meeting of your creditors.

If your creditors agree to your offer to pay them, you can apply to the court for an annulment. This application can be made 28 days after the chairman of the meeting of creditors has reported the results of the meeting to the court.

The application should be made using the same procedure as applications where the bankruptcy order should not have been made. The only difference is that your affidavit or the witness statement verified by a statement of truth accompanying the application form should state that your creditors have approved a voluntary arrangement as the grounds on which you are making your application.

If your creditors have agreed to a fast-track voluntary arrangement (application under section 263D of the Insolvency Act 1986), these are the steps:

When you nominate the official receiver to deal with your proposal for a voluntary arrangement, if he (or she) believes that your proposal has a reasonable prospect of being approved and implemented, he will invite creditors to consider it.

If your creditors agree to your proposal, the official receiver will report that decision to court and, 5-7 weeks later, will apply for the bankruptcy order to be annulled.