The term bankruptcy applies only to individuals, not to companies or other legal entities, therefore the expression Bankruptcy Petition is only applicable to individuals and sole traders. There are separate procedures in respect of partners in firms. In the case of a Limited Company the equivalent term is a Winding Up Petition.
A Bankruptcy Petition is a request to a court by a creditor for an individual to be made bankrupt due to that person being unable to pay their lawful debts.
In simple terms the court is asked to freeze all the person's assets and appoint someone to sell all those assets to raise as much money as possible to pay of the person's creditors.
An individual may be made bankrupt only by court order following the presentation of a bankruptcy petition. An individual may present his own petition on the ground that he is unable to pay his debts. A creditor or creditors may also petition for a bankruptcy order to be made against an individual debtor.
Before a creditor presents a bankruptcy petition he must usually first serve on the debtor a Statutory Demand in the prescribed form requiring the debtor to pay the sum claimed within 21 days of service of the Statutory Demand. The debtor may apply to the court to set aside the Statutory Demand on the basis that the debt is disputed on bona fide grounds or that he has a counterclaim, set off or cross-demand which equals or exceeds the amount of the debt claimed by the creditor. If the debtor fails to pay the sum claimed in the Statutory Demand or to apply to set aside the demand or if his application to set aside the Statutory Demand is dismissed by the court, the creditor may present a bankruptcy petition. Alternatively, a creditor may petition without first serving a Statutory Demand if execution on a judgment has failed. In either case the debtor must owe the creditor at least £750 and the claim must be for a liquidated sum, i.e. a fixed sum of money (not, for example, damages).
A bankruptcy petition must generally be served on the debtor personally, but if he evades service the court may order substituted service, i.e. service by post or some other method which is likely to bring the demand to the debtor's attention.
Even sector professionals like solicitors and insolvency practitioners use a Process Server to serve Bankruptcy Petitions. In choosing your Process Server you should ensure that the person or firm know what they are doing and are covered by professional indemnity insurance should anything go wrong.
At the hearing of the petition the court may make a bankruptcy order if the debt is undisputed or not capable of being disputed, dismiss the Bankruptcy Petition (for example if the debt has been paid) or adjourn the Bankruptcy Petition to give the debtor time to pay.
If a bankruptcy order is made following the presentation of a Bankruptcy Petition the administration of the bankrupt person's affairs is usually handled by a licensed insolvency practitioner appointed by the creditors at a meeting called for that purpose. The bankrupt's assets excluding tools of his trade and other essentials vest in his trustee who is obliged to realise them, generally by selling them, to pay a dividend to creditors.
A bankrupt person is subject to certain restrictions, principally that he may not raise credit without informing the person from whom he is borrowing that he is a bankrupt, and that he may not act as a director of a company. He is also subject to obligations to give information to his trustee and to cooperate with him in the administration of his affairs. Extensive powers are available to enable the court to compel the bankrupt to do so. Similarly the court has power to undo a range of transactions entered into by the bankrupt with a view to dissipating or reducing the value of his assets in the period before his bankruptcy.
In England & Wales bankruptcy will now normally last no longer than 12 months and perhaps even less. At the end of the period the bankrupt is discharged and he or she ceases to be liable for their bankruptcy debts. However, in cases where the bankrupt is considered culpable for his or her insolvency, a bankruptcy restrictions order may be made to extend some of the restrictions of bankruptcy for up to 15 years.
Try this Process Serving
company with Experienced, Professional Process Servers who will
serve legal
documents correctly and promptly anywhere in the UK