Be Careful What You Wish For ' It Might Come True!

• Published date: 14 June 2021
• Subject Matter: Finance and Banking, Insolvency/Bankruptcy/Re-structuring, Debt Capital Markets, Insolvency/Bankruptcy
• Law Firm: Travlaw
• Author: Ms Krystene Bousfield

I have presented a number of seminars recently focusing on the importance of properly advising your client when it comes to the enforcement of judgments, specifically in relation to debt recovery matters.

Some clients want to throw everything at a debtor - "Sue them! Bankrupt them! I don't care!" - but suing someone or threatening bankruptcy doesn't necessarily mean you will get your money. Indeed, a client may well spend a considerable amount more pursuing the debt than they are even likely to recover.

A recent decision handed down by the Court of Appeal in the matter of Michael Wilson & Partners Ltd v Sinclair & Ors [2021] EWCA Civ 505 proved just that, when the claimant petitioned for the defendant's bankruptcy, only to then object when it was granted as it meant that they could not recover their own money!

The Facts

The claimant (MWP) held a substantial judgment against the defendant. The claimant sought to enforce that judgment by way of a third party debt order. That application was refused and the claimant appealed. In the meantime, however the defendant had been made bankrupt on the claimant's petition.

The Court of Appeal found that there was no prospect of the claimant being able to keep the benefit of the third party debt order (because of the bankruptcy) and therefore there was no substantive purpose in pursuing the appeal.

The court took no pity on MWP, who appeared to have shot themselves in the foot!

"the current situation is one of MWP's own making.... MWP chose to present and pursue the petition against Mr Sinclair to the point where it succeeded in...