A recent insolvency case reminds us of the importance of ensuring that insolvency proceedings are brought in the right court at the right time.
Insolvency law is an area which is full of time limits. If these time limits are not met there can be serious consequences for the persons involved, either someone awaiting a bankruptcy order or a creditor.
A Trustee in Bankruptcy is the person appointed by the Court to manage the affairs of a person who has been made bankrupt. After a Trustee has been appointed, the bankrupt person cannot deal with their own asserts or sell their house without the involvement of the Trustee.
There is a statutory provision which provides that at the end of the period of three years beginning with the date of the bankruptcy, the home of a bankrupt person will cease to form part of the bankruptcy estate and will automatically re-vest in the bankrupt. A Trustee in Bankruptcy can stop this happening if they apply for an Order to sell the home within three years of the date of the bankruptcy.
In the recent case, the Trustee applied for an Order for sale in the Coventry County Court on 26 September 2014 which was the last day of the expiry of the three year period. For various administrative reasons, the case was not issued until 1 November 2014. The bankrupt noticed the date of issue as 1 November and argued that it had been issued out of time and so his home should transfer back to him.
The court in the case held that the case had been properly issued in the Coventry County Court on 26 September 2014 and the bankrupt's application failed.
It can be seen that the Trustee in Bankruptcy may have been somewhat lucky in winning the case and demonstrates the importance of not trying to take important steps such as issuing court proceedings at or near a crucial deadline.
If you want to protect your position in an insolvency case, you should take legal advice in a timely manner.
To discuss this or any other insolvency related issue contact us.