The adjudicator refused the bankruptcy application on the basis that the availability of the pension pots should be taken into account when determining whether Shaw could pay his debts at the date of determination of the bankruptcy application pursuant to s.263K(1)(b) of the Insolvency Act 1986.
Shaw appealed the decision to the County Court, where the judge made a bankruptcy order on the basis that Shaw’s pensions (especially the workplace pension) could not be easily realised. The adjudicator appealed the decision.
The High Court found that the burden of proof was on Shaw to establish that he was unable to pay his debts as at the date of the adjudicator's determination. His evidence had failed to establish any timeframe for the draw-down of his pension pots (and consequently this could not be objectively considered). In such circumstances, Shaw had not discharged the evidential burden necessary to establish that he was unable to pay his debts. The adjudicator’s appeal was allowed, and the bankruptcy order was discharged.
The High Court found it inevitable that different considerations apply to debtors' and to creditors' petitions, where (for example) the availability of pension pots need not be considered.
As an aside, the High Court also found the Secretary of State for BEIS (as the adjudicator’s employer) should not have been ordered to pay the costs of Shaw’s appeal to the County Court. This decision will make it harder for debtors to recover the costs of any successful reconsideration or appeal against an adjudicator’s decision.
The Office of the Bankruptcy Adjudicator, The Secretary of State for Business, Energy & Industrial Strategy v Michael John Shaw, [2021] EWHC 3140 (Ch)
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