Consider whether the EC Regulation on insolvency is applicable as that will take precedence in determining whether the court has jurisdiction to consider the bankruptcy petition. The EC Regulation on insolvency aims to improve the efficiency of insolvency proceedings where there is a cross-border element. Under these regulations the court in England or Wales will have jurisdiction if the debtor has their centre of main interest (COMI) in England or Wales, even if they don't live there.
Therefore, a bankruptcy petition may be presented by the creditor to court only if the centre of the debtor's main interests is in England or Wales. If that is not the case and the debtor's COMI is also not in a member state of the European Union which has adopted the EC Regulation, then the court will still be able to hear the petition if:
Carrying on business includes:
If a creditor (or a group of creditors together) wants to apply for a bankruptcy order their petition must show, amongst other things that the debtor owes them £5,000 or more in total and that for each debt specified in the petition:
To prove to court that the debtor is unable to pay their debts a creditor usually relies upon one of the following:
The debtor's failure to comply with a statutory demand for payment of a debt
The form of statutory demand used will depend on whether:
The creditor has to show that the statutory demand was served on the debtor. This is done by completing either:
A creditor should take all possible steps to serve the statutory demand personally on the debtor. This means that personal calls should be made at all known residences and places of business of the debtor in an attempt to serve the demand personally. If those attempts fail, the creditor must take every further reasonable step to make sure that the statutory demand does come to the attention of the debtor. These steps could include writing a letter to the debtor to advise of the failed attempts to serve the demand and giving at least 2 business days' notice when a further attempt will be made. It should give the debtor the opportunity to suggest a different time or place if the proposed appointment is not convenient. The letter should also advise that if the further attempt is also unsuccessful the demand will be served by advertisement in the media or by post and the court will be asked to accept that as proper service of the demand. The letter should specify which method will be used.
When attending any appointment made by letter, inquiry should be made as to whether the debtor has received all letters left for them. If the debtor is away, inquiry should also be made as to whether or not letters are being forwarded to an address within the jurisdiction (England and Wales) or elsewhere.
If personal service remains unsuccessful and the debtor is represented by a solicitor, the creditor should also attempt to obtain personal service through that solicitor or for the solicitor to accept service on behalf of the debtor.
A note of the way in which the statutory demand was served must be kept. This note should record the steps taken in order to serve it, the times and dates of service and the details of any people involved. The reason for this is that the Certificate of service of the statutory demand will require these details to be supplied.
However, where the statutory demand is for payment of a sum due under a judgment or order of any court and the creditor knows, or believes with reasonable cause that the debtor has absconded or is keeping out of the way in order to avoiding service, and there is no real prospect of the sum due being recovered by execution or other process, then the creditor may, without taking the steps discussed above, advertise the demand in such manner as they think fit. The time limited for compliance with the demand runs from the date of the advertisement's first appearance.
A formal process issued to enforce a judgment debt being unsuccessful
To show the court that the judgment debt has not been satisfied an enforcement officer's 'return' (a statement showing how much was recovered (if any) and how much has been paid towards the judgment debt (if any), costs, interest and the enforcement officer's charges) can be used as it would set out the value of the court judgment and the fact that it could not be satisfied as enough assets couldn't be recovered from the debtor.
The petition form used by the creditor will depend on which of the above 2 reasons the creditor is relying upon to prove that the debtor is unable to pay their debts.
If it is the failure of the debtor to comply with a statutory demand thenwill be used.
If it is that enforcement of a judgment debt has been unsuccessful thenwill be used.
The petition must be accompanied by a statement of truthin which the truth of the petition is confirmed.
Before the creditor can present the petition to court a check needs to be done to make sure that the debtor is not already subject to a bankruptcy order or that there hasn't been any other bankruptcy petitions against the debtor in the past 18 months.
This check is done by completing, to do a bankruptcy official search. This must be done within 7 days of the date that the petition is being presented to court. By completing form K16 a search is effected with the Chief Land Registrar in the register of pending actions for pending bankruptcy petitions presented against the debtor.
If a bankruptcy order is already in place a petition can't be proceeded with. However, the creditor can register as a creditor in the existing bankruptcy. If there is an ongoing application for bankruptcy it would be cheaper to support that petition instead of continuing with a new petition.
A creditor presenting a petition must confirm to the court that thesehave been done and that if an existing application was found that the creditor is proceeding with a new petition accepting the risk of incurring costs.
When presenting the bankruptcy petition to court both a deposit to cover part of the costs of administering the bankrupt estate and a court fee must be included. The amount of these costs and fees are available.
If the application falls outside the London insolvency district
Bankruptcy petitions must be presented to the county court hearing centre, dealing with insolvency applications, that is closest to the place where the debtor resides or has a place of business. If the debtor resided at more than one address or had a place of business in more than one location then the relevant address to determine the correct county court hearing centre is the one where they were for the longest during the preceding 6 months. For some county court hearing centres insolvency petitions have to be presented at alternative courts, so it would be best to use theto make sure the correct court is used.
Where the debtor no longer resides or carries on business in England or Wales but did so at some time during the preceding 6 months the petition can be presented either to the relevant County Court (see above) or the High Court.
If the application falls within the London insolvency district
If the application is made by a creditor the petition must be presented to the County Court at Central London if the unsecured liabilities are less than £50,000 otherwise to the High Court.
A debtor's affairs fall (or are deemed to fall) within the London insolvency district only if one of more of the following conditions apply:
The London insolvency district
The County Court at Central London
Clerkenwell and Shoreditch
Mayor's and City of London Court