Know Your Limitations: Use It Or Lose It!

• Published date: 23 April 2021
• Subject Matter: Insolvency/Bankruptcy/Re-structuring, Insolvency/Bankruptcy
• Law Firm: Cleaver Fulton Rankin
• Author: Ms Maria McNally

The Bankruptcy Court recently delivered a judgement following an application to extend the 3 year statutory period which permits a Trustee in Bankruptcy to realise a bankrupt's home for the benefit of the estate. An application was made by a Trustee in Bankruptcy ("the Trustee") to substitute the statutory 3 year period with a period of 4 years under article 256A(6) of the Insolvency (Northern Ireland) Order 1989. The Trustee had agreed the subject property for sale and needed more time to complete the sale.

A Bankruptcy Order was made against the bankrupt on 10 November 2017 with the 3 year period ending on 10 November 2020. The application to extend the period was filed on 23 October 2020 and was listed for review on 20 November 2020 which was 10 days after the third anniversary. The application was heard on 18 December 2020 by which date the sale of the property fell through.

As the 3 year period had expired prior to hearing of the application to extend it, the court determined that two core issues arose:

• whether the Court has jurisdiction to grant the relief sought;
• whether the Court should exercise its discretion to do so.

The issue of jurisdiction is normally a straightforward matter however in this case the Court needed to determine if an order can be made if the third anniversary of the date of bankruptcy occurs between the date on which the application was issued and the date on which the court is due to hear and decide it.

In support of the application, the Applicant's Solicitor submitted that he believed that time would stop running when the application was lodged as article 256A(6) "specifically allows for certain applications to be issued that stop time running". The Court considered that the specific point in time is the third anniversary of the date of bankruptcy...