A more liberal regime will apply to bankruptcies from 1 April 2004

• Automatic discharge from bankruptcy after one year;
• Earlier discharge if the Official Receiver files a notice that the affairs of the bankrupt do not require investigation;
• After 3 years the bankrupt's main house is automatically removed from assets available for distribution to unsecured creditors; but
• The Court must dismiss an application for sale of the bankrupt's house whenever it is made, if it is a low value house; and
• A streamlined procedure for Individual Voluntary Arrangements e.g., no creditor's meeting, no provision for modifying the bankrupt's proposals for the IVA, the Official Receiver and not a licensed insolvency practitioner is nominee.

So what protection is available to creditors?

• The Official Receiver can request the Court suspend an early discharge from bankruptcy;
• A creditor can object to early discharge from bankruptcy but must set out grounds and provide evidence;
• The Court can make a bankruptcy restriction order which lasts between 2 and 15 years and prevents the bankrupt from acting as a director or being involved in the management of a Company;
• The bankrupt can be ordered to make payments out of income up to 3 years after discharge of the bankruptcy.

Jan Arkwright
Associate

25 March 2004