Court has discretion whether to annul bankruptcy order

In January 2023, the appellant obtained a moratorium under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020. The petitioner's solicitor's firm failed to notify the court of the moratorium, and so the court did not stay the petition as it should have done. A bankruptcy order was made in February 2023.

At the application to annul, the judge held that the court retained a discretion to annul under the Insolvency Act. The court noted the fact the bankrupt had funds to pay the bankruptcy debt at the end of 2022 and inferred that full disclosure had not been provided to the bankrupt’s debt adviser when applying for a moratorium.

The court concluded that, while the bankruptcy order should not have been made, the fact that the moratorium was obtained with the benefit of flagrant non-disclosure ultimately trumped the failure of the petitioner to notify the court of the existence of the moratorium.

The bankrupt appealed and the appeal was dismissed. The court found that the making of a bankruptcy order in circumstances where there had been a failure to comply with the mandatory requirement to stay, the bankruptcy petition did not render the bankruptcy order “null and void”. The court had discretion to annul the bankruptcy order, and in the absence of a separate appeal against the exercise of that discretion, the appeal was dismissed.

Carter v Davies and others [2024] EWHC 1536 (Ch)