News
Wed 21st Dec 2011 Personal Insolvency - Income Payments Order
According to Mr Justice Newey, the answer is yes.
SUMMARY
On 16 December 2011, the learned Judge held that although the receipts into the Bankrupt's estate under an IPO pursuant to Section 310 of the Insolvency Act 1986, would be unlikely to be sufficient to enable a distribution to unsecured creditors, that was not a ground for refusing to make an order.
THE FACTS
In the case of Official Receiver and Anor -v- Negus [2011] the Official Receiver appealed against a decision whereby the Court refused to make an IPO, in respect of the respondent bankrupt ("N").
N had been made bankrupt on his own petition and had stated that he had unsecured debts of circa £8,000, with take-home pay of £1,000 per month together with monthly expenditure of £920.
The OR applied for an IPO under Section 310 IA 1986, suggesting a figure of £40 per month being 50% of the difference between N's net income and his expenses. Even though N did not oppose the application, the judge refused it, holding that the payments would be exhausted by the fees to the receiver and the Secretary of State and would not pay off any of the debts. With the Judge's permission, the OR appealed.
SILENCE SPEAKS LOUDER THAN WORDS....
Mr Justice Newey held that the Judge had erred in law, and the fact that the sums that would be received under the IPO would be unlikely to be sufficient to enable a distribution to unsecured creditors, was not a ground for refusing to make an order. He went on to say that had Parliament intended that an IPO could be made only when it would benefit creditors, it would have said so. Section 310 was silent about being in the interests of creditors.
Secondly, he held that the scheme of the Insolvency Act 1986 did not say that fees were less important than debts. In point of fact they had priority over unsecured debts.
Thirdly, bankruptcy had a public aspect and it was not just for the benefit of creditors.
