Please note that the Insolvency Practice directions concerning searches to be undertaken before issuing a bankrputcy petition have now been updated since the article below was written in November 2012
We have been inundated over the past few weeks with enquires regarding the requirement to undertake searches in person at the Royal Courts of Justice (The RCJ) before presenting Bankruptcy Petitions in London and also in local county courts and District Registries. Believe it or not, not all Courts are singing from the same hymn sheet!
The new Insolvency Practice Direction (paragraph 14.3: click here) makes it very clear that before presenting a Bankruptcy Petition you must undertake searches to ensure that no prior petitions have been presented against the debtor in the previous 18 months. The searches must be carried out at:-
c. in any county court which it is believed is or was within that period the debtor’s own county court within the meaning of rule 6.9A (3).
Searches at the RCJ and the Central London County Court can only be undertaken in person, by using computer terminals within the Thomas More building at the RCJ. Searches within the local county court cannot be undertaken in person and can only be requested by post from the relevant local court, by enclosing a cheque for £45.00.
The RCJ now requires that where Bankruptcy Petitions are to be presented there, that the search be carried out in person and the petition then be presented in person, the same day. The RCJ will not issue any Bankruptcy Petition received by either Royal mail or DX Post. The reasoning behind this is that the Insolvency Practice Direction states that a Bankruptcy Petition shall include the following certificate at the end of the Petition:
“I/we certify that I/we conducted a search for petitions presented against the debtor in the period of 18 months ending today….”
The said certificate must be signed and dated recording the outcome of the search. This requirement has caused many clients to ponder how they can present a bankruptcy petition in a local county court and undertake the required searches in the same day?
My view is that the request for the local search could be made at the time of presentation of the Bankruptcy Petition within the local county court, by asking the court to undertake the search and thereafter presenting the petition (remembering to include cheque(s) for all the relevant court fees! and evidence of the RCJ Search).
However, it would be more difficult to undertake a search at the RCJ on the same day as presenting a petition at a local County Court or District Registry.
Having made enquires with bankruptcy sections within various County Courts and District Registries the situation became murkier, most claimed that they knew the Insolvency Practice Direction existed but that they only checked the Bankruptcy Petition to ensure that the relevant declaration as to searches for prior petitions was included on the certificate, however they did not ask for evidence of this to be supplied. Another advised that they only required a copy of a Land Registry search to be attached to the back of the petition? Further, one court clerk appeared not to even know that the Insolvency Practice Direction existed! Indeed, most court staff were vague as to their understanding as to what is actually required in terms of a prior Bankruptcy Petition search
It has been also suggested to me by various practioners that undertaking a Land Registry search is “ok” and “x” court will accept them, but what is apparent to me is that what you may get away with in one court now, you may not in another, or even within the same court in a month or so from now.
As with any new procedure, there is a transitional period, however the Insolvency Practice Direction is very clear and it carries statutory force and the consequences of such. Accordingly, practioners should be warned that by not undertaking the required searches correctly, then completing the certificate at the bottom of the Bankruptcy Petition, they are potentially guilty of misleading the court, which is likely to be interpreted as an abuse of process.
It is my view (and that of Counsel, Miss Eleanor Temple, of Kings Chambers, Leeds, Manchester and Birmingham with whom I have consulted), that this sort of default, perhaps coupled with other alleged default(s) i.e. improper or defective attempts at service, could, on a cumulative basis, lead to a Bankruptcy Petition being dismissed – at the creditors’ cost Non-compliance with a Practice Direction could also be a reason for the Court striking out a Bankruptcy Petition as an abuse of process under CPR 3.4(2)(c) or for costs sanctions to be applied.
Tremark Associates are able to undertake searches in person at the RCJ. The service includes the provision of a report, which can be used as evidence confirming that searches within the RCJ and the Central London County Courts have been undertaken to comply with the Insolvency Practice Direction. The fee for this service is £35.00 plus VAT. We also offer a complete RCJ issuing service, whereby will undertake the relevant searches and then present Bankruptcy Petitions in person.
TREMARK Associates Ltd