Out-Law Legal Update 1 min. read
First-lodged bankruptcy petition should be heard first, says High Court
27 Feb 2019, 11:15 am
LEGAL UPDATE: A judge in the Insolvency and Companies Court (ICC) was wrong to adjourn a bankruptcy petition hearing, an action which meant that the first creditors to present bankruptcy petitions would have their case heard first. The High Court in England has said that the ICC judge should have given reasons for not following two previous ICC orders that the first petition be heard first.
Islandsbanki HF presented a bankruptcy petition against Kevin Stanford in April 2017, which was followed by petitions from the UK tax authority Her Majesty's Revenue and Customs (HMRC) and Shineclear Holdings Limited.
At the final hearing of Islandsbanki's bankruptcy petition in 20 December 2018 ICC Judge Jones adjourned Islandsbanki's petition and listed it for hearing together with the other two.
Islandsbanki wanted to appeal part of ICC Judge Jones's order but permission to appeal was refused on paper by Mr Justice Henry Carr. The High Court held an oral review and Mr Justice Henry Carr granted Islandsbanki permission to appeal on the basis that the parties were unanimous that ICC Judge Jones had "erred in principle" in not confirming that the Islandsbanki petition would be heard first.
Two earlier orders by ICC judges had said that Islandsbanki's petition should be heard first, so the High Court said that Judge Jones should have given a reasoned judgment outlining why the HMRC's petition would be heard before Islandsbanki's.
The High Court Judge said that it can be difficult to make orders on paper about permission to appeal applications without receiving submissions from the other side in the case.
The High Court Judge said that it might sometimes be useful for judges to allow the other side to be served with the documents relating to such appeals on paper and be permitted to make short submissions. There are not usually submissions from the other side on applications for permission to appeal on paper.
The ruling said that in these proceedings if HMRC was able to make submissions the appeal might well have been granted without a hearing, saving considerable time and financial costs.
Gemma Kaplan is a restructuring expert at Pinsent Masons, the law firm behind Out-Law.com
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