England: Insolvency Legal Update
Trustee in Bankruptcy Obtains Orders of Contempt against Bankrupts
Mr and Mrs B were bankrupted by the Australian Courts. The Australian Trustee in Bankruptcy subsequently obtained Orders recognising the bankruptcies in the UK. The Trustee then applied for the private examination of the Bankrupts to ascertain the full extent of their asset base and financial affairs. Those examinations took place in October 2010 at which Orders were made requiring the Bankrupts to deliver up stipulated documents and information.
The Bankrupts failed to cooperate and had a tendency to drip feed the documents they were ordered to provide. Despite best efforts the Trustee was eventually forced to apply for orders that the Bankrupts were in Contempt of Court. The Bankrupts provided basic medical certificates the day before the hearing, stating they were both unfit to attend or deal with legal proceedings. No formal application was made to adjourn was made by them.
The Court decided that the medical certificates comprised an informal adjournment application by the Bankrupts. However, that application was dismissed. The medical certificates failed to provide any satisfactory basis on which to grant an adjournment. No particulars were given of the conditions the Bankrupts suffered, nor did they detail how such conditions impacted on the ability to participate in legal proceedings. The Bankrupts could have instructed lawyers to appear on their behalf, given they had received significant notice of the date of this hearing.
The Court went on to decide the Trustee's application which now focused on 3 main areas: bank accounts; professional advisors files; and details of a Trust.
It was not necessary for the Trustee to prove motive or that the Bankrupts had deliberately acted in contempt. It was a simple matter for the Bankrupts to advise their banks and professional advisors to release files and documents in their entirety. Although some documents had been provided, they were not those specifically set out in the previous orders. The Bankrupts had not provided any evidence that they had taken any steps to prompt their banks and professional advisors to provide the stipulated documents and information. To that end, it was clear that the Bankrupts were in contempt of the previous orders. In terms of sanctions, the Court held it was appropriate for the Bankrupts to pay the Trustee's costs of the applications, and the fine each of them the sum of £500. That fine took into account the evidence of the Bankrupts depression, and their partial compliance with the previous orders.
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