Presenting a Creditor's Bankruptcy Petition

If you are a creditor who is owed money by an individual, presenting a bankruptcy petition is one option available to you to try and recover the debt owing. 

Filing a bankruptcy petition is only appropriate where several conditions have been met, which are explained by our Insolvency solicitors below. 

Prior to presenting a bankruptcy petition, a statutory demand has to be served on the debtor. 

A statutory demand is a formal way of asking for a debt to be repaid and provides the debtor with either 21 days to pay the debt or 18 days to make an application to the court to have the statutory demand set aside. 

An application to set aside a statutory demand can be made if either the debt is disputed on substantial grounds or the debtor has a counterclaim or set-off that would reduce the debt to less than the bankruptcy level of £5,000.   

The bankruptcy petition will be issued in the local court of the debtor.  As at the time of the publication of this blog, the court fee payable to present a bankruptcy petition is £332, and a deposit of £1,500 must be paid to cover the initial costs of the Official Receiver who will be appointed as Trustee in Bankruptcy if a bankruptcy order is made. 

If a bankruptcy order is not made, the £1,500 deposit (less a £50 administrative charge) will be refunded.   

The court will seal the bankruptcy petition and set a first hearing date for the petition to be heard. 

Once the bankruptcy petition is sealed by the court, the bankruptcy petition must be personally served on the debtor unless the court allows service of the bankruptcy petition by an alternative method where appropriate. 

Please note, if there are other creditors owed money by the debtor then those creditors also have the right to attend the hearing in order to either support or oppose the bankruptcy petition. 

Before the hearing, it is also necessary to confirm to the court that the debt is still due and owing and has not been paid or secured. 

If a bankruptcy order is made, the Official Receiver will be appointed as Trustee in Bankruptcy by the court. 

The Official Receiver will carry out investigations and gather information regarding the debtor's assets and liabilities which constitute part of the bankruptcy estate.

The Official Receiver will also determine who the creditors are and when and how they will be paid. This will be based on whether the creditor has a security over any of the assets or is a preferential creditor. 

If you are an unsecured creditor and there are insufficient funds to pay all unsecured creditors in full, you will receive a pro-rata payment in accordance with the size of your debt and the amount owed to other unsecured creditors.

It is important to note that making a debtor bankrupt does not mean your debt will be paid ahead of sums owed to other creditors (particularly secured creditors). 

Unfortunately, it is often the case that there are insufficient funds to pay any sums to unsecured creditors.

It is sometimes the case that the Official Receiver is replaced as Trustee in Bankruptcy by an insolvency practitioner. 

Any insolvency practitioner who acts as Trustee in Bankruptcy has the same role as the Official Receiver.