New Case - Petitions
August 2007
Introduction
i What is a petition?
A petition must be presented to the court before a bankruptcy order or winding-up order is made. It is a formal written request for an individual to be made bankrupt or a company or partnership to be wound up compulsorily.
ii Deceased Insolvents
Where a person dies after a bankruptcy petition is presented against him/her the matter continues as a normal bankruptcy but with some amendments.
Where a person dies before a bankruptcy petition is presented, a petition for an insolvency administration order can be presented under the Administration of Insolvent Estates of Deceased Persons Order 1986.
For further information see Case Help Manual Part - Deceased Insolvents.
iii Who may present a petition?
In most cases a petition will be presented by one of the following -
a. any creditor who has an unsecured liability of at least £750
b. the debtor him/herself
c. the directors or shareholders of a company
d. the supervisor of a voluntary arrangement or an administrative receiver
e. the Secretary of State in a public interest case.
iv Why is a petition presented?
The most common reason for presenting a petition is that the debtor or company cannot pay their debts. This is proved to the satisfaction of the court, by failure to pay a statutory demand or judgment debt.
Another ground which is sometimes used in company cases is where the court thinks that it is ‘just and equitable’ to wind up the company. This procedure is appropriate for situations in which it is no longer practical for a small company to exist, i.e. where the directors can no longer agree on the management of a company, or where a company was formed for a specific purpose which it has now fulfilled, or where it is no longer able to do so.
Shareholders may terminate the existence of their company on the grounds that it is ‘just and equitable’ for the company to be wound up.
v Contents of the petition
Company and bankruptcy petitions are prepared on statutory forms, a full list of which is contained in Schedule 4 of The Insolvency Rules 1986.
Petitions to be presented in partnership cases and its members are contained in Schedule 9 of The Insolvent Partnerships Order 1994.
All of these forms can be obtained by accessing the Service’s website at www.insolvency.gov.uk.
With a bankruptcy petition, as much detail as possible is included to enable the debtor to be identified, e.g. the debtor’s full name, address and occupation, together with any trading details or aliases if appropriate.
In a winding up, the petition must show the full and correct name of the company, its registered number, the registered office address and the grounds for the winding up.
Each petition in a partnership will also contain particulars of other petitions being presented which are connected to the partnership, e.g. petitions against its members.
vi Identifying the proceedings
Each petition is headed by a number given to it by the court which is a unique reference, e.g. Birmingham County Court No. 132 of 2007. The only time that this number will change is if the proceedings are later transferred to a different court.
vii Deposit
On presenting a petition the petitioner must pay a deposit to cover the initial costs and the court will then fix the date for hearing the petition. The amount of the deposit is set by The Insolvency Proceedings (Fees) (Amendment) Order 2007 and can be increased or decreased by Parliament.
viii Possible Results at the Hearing
There are several decisions the court may make upon hearing the petition. It may order that the petition be dismissed if, e.g. the debt has been paid, or that the hearing be adjourned if there has been a problem over service. Further, a petition may be withdrawn by the petitioner after having sought and been given leave of the court to do so.
Before making a bankruptcy order or winding-up order the court must be satisfied that the debt is still owed and there is no reasonable prospect of the debt being paid by the company or debtor.
ix Debtor’s petitions
Debtor’s petitions are usually heard immediately. When this is not possible a date will be fixed for a hearing as soon as possible. The only ground for presenting a debtor’s petition is inability to pay debts and a statement to this effect is included with the petition, together with a statement of affairs.
At the hearing of a debtor’s petition the court will usually make a bankruptcy order.
Notes:
a. The petition details must be recorded on LOIS before the deposit can be dealt with on LOLA.
b. The deposit must be returned to the petitioning creditor’s solicitor upon receipt of an order from the court dismissing or confirming withdrawal of the petition.
Where can I find out more?
Insolvency Act 1986
Part IV Chapter V1 Sections 117, 122 to 130
Part IX Chapter 1 Sections 264 to 274, 276 to 277
Insolvency Rules 1986
Rule 4.2 to 4.24
Rule 6.7 to 6.46
Technical Manual
Chapter 4 – Initial Procedure When Bankruptcy Order Made
Chapter 12 – Statement of Affairs
Chapter 45 – Proceedings up to Order
Chapter 54 – Deceased Insolvents
Case Help Manual
Initial Contact in debtor’s petition cases
Notices
Finance: F18/07 Changes to Insolvency Fees
LOIS Workbook
Estate Accounting Directorate – Petitions and Deposits Team
The Insolvency Service website at www.insolvency.gov.uk
‘Do It Online’ - Forms - Forms for England and Wales
Forms
6.25 Bankruptcy Order on Creditors Petition
6.7 Creditor’s Bankruptcy Petition on Failure to Comply with a Statutory
Demand for a Liquidated sum Payable Immediately
6.9 Creditor’s Bankruptcy Petition Where Execution or Other process on a
Judgment has been Returned in Whole or Part
6.26 Debtors Bankruptcy Petition
6.28 Statement of Affairs (Debtor’s petition)
6.28 Statement of Affairs (Debtor’s Petition) (Guidance Notes)
4.2 Winding-Up Petition
5 Creditor’s Petition to Wind Up Partnership (Presented in Conjunction
With Petitions against Members)
7 Creditor’s Bankruptcy Petition against Individual Member (Presented in
conjunction with Petition against Partnership)
Click HERE to view the flowchart for Dealing with Petitions
Procedure
Petition Deposits
All petition deposits are received by EAD Petitions and Deposits Team in Birmingham directly and no longer involve local official receivers’ offices.
County Court Deposits
Creditor’s Petitions
1 . The court is required to send a copy of the petition with the deposit to the Service’s Estate Accounting Directorate (EAD). Some county courts send a copy of the petition to the local official receiver’s office but there is no requirement for them to do so.
2 EAD will record the petition details on LOIS (CA01). entering the following information -
a court and number
b type of insolvency (bankruptcy or company)
c full name of bankrupt or company
d date petition was presented to court
e type of petition (whether creditors or debtor’s)
f name of petitioning creditor
g petitioner type
h date petition is to be heard
i the name, address, telephone number and reference of the petitioning creditor’s solicitors. It is important to enter the name of the firm of solicitors acting for the petitioner and not a solicitor’s personal name when recording these details
j state whether a partnership or not, if so, the number of partners should also be input at this stage
3 When all of the petition paperwork has been forwarded by EAD to the local official receiver’s office it should be filed according to local office practice, e.g. date, court, or alphabetic order.
After the hearing
4 The court notifies the official receiver of the result of the hearing, e.g. adjourned, dismissed, withdrawn or order made.
5 Where the petition is adjourned enter the date the petition is adjourned to on LOIS (CA10) and re-file the petition accordingly.
6 Where the petition is dismissed or withdrawn the local office will enter the result on LOIS (CA10) and forward the petition to EAD with a copy of the dismissal or withdrawal order from court. EAD will then access LOLA and process the return of the deposit to the petitioning creditor’s solicitors.
7 Where a bankruptcy order or winding-up order is made enter the result on LOIS (CA10), retrieve the petition and attach it to the order. Pass notification of the order together with the petition to the person responsible for allocating cases to an examiner and a case officer.
Debtor’s Petition
8 Receive notification from Court by phone or fax, that a bankruptcy order has been made.
9 Obtain the following information -
a court and number
b name of debtor
c check description for accuracy
10 Record petition details on LOIS (CA01) as in step 2. To assist EAD in posting the deposit on to LOLA it is important that wherever possible this information is entered on to LOIS on the day that the order is made.
11 If previously bankrupt enter known details on LOIS (CA02)
12 Record that the bankruptcy order was made on LOIS (CA10)
13 Pass all papers to the person responsible for allocating cases to an examiner and a case officer.
14 If the debtor is at court intial contact may be established with him/her. For further information see CHM part Initial Contact in Debtor’s Petition cases.
High Court and District Registry Deposits
The following procedure is applicable to both bankruptcy petitions and winding up petitions presented in the High Court, and to winding up petitions presented in its District Registries.
High Court and District Registry cases are dealt with initially by an exchange of information between the London Petitions & Transfers Team and the EAD Petitions & Deposits Team in Birmingham.
1 The London Petitions & Transfers Team will enter case details onto LOIS (CA01, 02, & 10). They will then inform EAD that appropriate cases are entered onto LOIS ready for a deposit to be posted to them.
2 In dismissed or withdrawn cases London Petitions & Transfers Team will process the refund of deposits to petitioning creditors’ solicitors.
3 Where orders are made the local official receiver’s office is notified by email and a copy of each petition is forwarded to them by post.
4 When notified of the order(s) the local office will pass the notification to the person responsible for allocating cases to an examiner and a case officer.
Click HERE to view the EAD Petitions and Deposits Team Service Level Agreement for more detailed information.