A debtor's application to adjourn the bankruptcy petition to get more time to pay the petition debt was unsuccessful.
Summary
The High Court considered whether to adjourn the bankruptcy petition to give the debtor time to pay the petition debt and decided that the debtor could not justify adjournment of the bankruptcy petition.
Background
Robertson (R) was one of the creditors who applied for the debtor Wojakovski (W) to be declared bankrupt based on an unsatisfied statutory demand for over £135,000. The underlying judgment debt related to a costs order that W had failed to pay.
W also owed a total of approximately £16 million to other creditors.
W did not oppose to the bankruptcy petition. However, W argued that the petition hearing should be adjourned to give them time to pay their debts. W claimed that there was a reasonable prospect that they would be able to pay £135,000 within a reasonable time, and that if it was absolutely necessary to show a reasonable prospect of paying all of their creditors, special factors meant that they should be given enough time to realise certain investments.
The other creditors opposed to the adjournment arguing that in order to justify an adjournment of the bankruptcy petition, W would need to show that there was a reasonable prospect of paying the petition debt and the other debts owed to supporting creditors.
The court's decision
The court agreed that there was jurisdiction for the bankruptcy petition to be adjourned to give a debtor time to pay within a reasonable time. However, the court agreed with the supporting creditors’ argument that the petition debt, as well as the debts owed to supporting creditors, would need to be paid if the bankruptcy petition was adjourned.
The court reaffirmed that bankruptcy is a ‘class remedy’ where the interests of all the supporting creditors must be considered. If W was given time to pay just the petition debt, this would lead to a payment being made in full to one creditor in preference to the other creditors, and that would lead to a ‘conflict with the class nature of bankruptcy’.
In addition, the court found that on the facts, W did not produce any credible evidence to support their argument that they could pay all supporting creditors.
Accordingly, the court proceeded to make a bankruptcy order against W.
Comments
This case confirms that for a debtor to be successful in getting a bankruptcy petition adjourned, they need to demonstrate that they can pay all undisputed debts within a reasonable amount of time, not just the petitioning creditor.