Should multiple bankruptcy petitions relating to the same debtor be heard together?

In April 2017 the bank had presented its petition to make the debtor bankrupt in respect of an unpaid judgment in Iceland of £1.3m.  Rather unusually, two other creditors had then presented later petitions (rather than supporting the existing petition). HMRC had presented their petition in August 2017, and a third petition had been presented by a company in September 2017.  The debtor disputed all three petitions on different grounds.

The bank’s petition was finally heard at a half-day hearing in December 2018 at which ICC Judge Jones refused to give or reserve judgment, instead listing the petition to be heard at the same time as the two later petitions.  The bank sought permission to appeal this case management decision.

The court allowed the appeal, holding as a matter of principle, the court should dispose of the first-in-time petition first.  There are strong reasons for this, not least because it is in the interests of creditors for the earliest petition to be heard first so as not to limit the scope of recovery; several potentially reviewable transactions had occurred within two years prior to the date of presentation of the bank’s petition, but not within two years of the later petitions.  Further, the judge had failed give any proper reasons or to hear submissions prior to making the order, which had not been requested and which contradicted two previous judicial decisions that the three petitions should not be heard together.

ISLANDSBANKI HF v KEVIN GERALD STANFORD [2019] EWHC 307 (Ch)