This is a particularly relevant bankruptcy restriction undertaking case due to the fact that the circumstances of the case are unlikely to be unique to Mr Williams only. In November of 2006 Mr Thompson made a false and misleading statement in order to obtain a mortgage. The Official Receiver alleged that this amounted to fraud or fraudulent breach of trust. Mr Thompson accepted these allegations and his bankruptcy restrictions were prolonged for a period of eight years.
Mr Thompson applied to a mortgage company claiming that he was a self employed owner of a plumbing business and that he had made a profit of £55,000 in the previous tax year. He was unable to keep up the repayments and the property was repossessed. The mortgage was approximately £172,000 and the sale of the property gave rise to a shortfall of £91,000 to the mortgage company and a liability to a second secured lender of approximately £15,000.
It is worth noting that in serious cases of fraud that you should expect the length of the bankruptcy restrictions order or undertaking to be closer to the 15 year mark. You may also attract a criminal liability punishable by imprisonment, fine or both.
As a separate warning it is worth noting that debts incurred by way of fraud or fraudulent breach of trust cannot be discharged through bankruptcy and as such will remain payable after your discharge. It is unclear whether this was in fact the case with Mr Thompson. There are a number of legal matters that need consideration in these instances.
If you require help understanding any of the matters discussed here please feel free to call the bankruptcy helpline. You may also like to look at the consequences of bankruptcy page.
Mr Randhawa and his wife operated a restaurant during which time he incurred debt. In 2004 he realised the extent of his debt and proposed an IVA to his creditors. The proposal was rejected in June 2004. He was subsequently declared bankrupt in July 2004.
Prior to the making of the bankruptcy order Mr Randhawa withdrew £9,500 from his wife’s credit card and spent it. The majority of the withdrawals took place after the IVA was rejected.
One of the important facts of this case is that Mr Randhawa provided various explanations of what he had done with the money. Initially he did not state the debt on his statement of affairs. Following this he stated various explanations as below:
- The money was used for family living expenses and his children’s school fees
- That he gambled away the money
Finally Mr Randhawa stated that he had given the money to an employee to gamble with. A number of principles were decided in this case including:
- It is for the court to decide whether, having regards to the conduct of the bankrupt, it is appropriate for a bankruptcy restrictions order to be made. If the court concludes that an order should be made then it shall make it for a term not less than two years.
- That the bankrupt persuading the court that he/she is no longer a danger to the public is not enough to avoid an order being made. Such orders are a deterrent to others also and therefore if the bankrupt’s behaviour justifies the making of an order it should be made.
It was the judges decision that a bankruptcy restriction order be made against Mr Randhawa for a period of three years.
The case of Mr Randhawa v Official Receiver also discussed how the court could determine the term that the restrictions should be prolonged for.
Please go to the Official Receiver page or the bankruptcy restrictions order page for more information.
This is a small example of how an individual was found to have acted to the detriment of his general body of creditors and subsequently had the restrictions of his bankruptcy prolonged for a period of three years.
Mr Jones had debts which exceeded his assets by £67,000. His monthly outgoings exceeded his income by £960. Before going bankrupt he had unsuccessfully attempted to enter into an IVA with his creditors.
In April of 2007, again before his bankruptcy, Mr Jones received a bonus from work to the sum of £6,250. He arranged to for it be paid into his wife’s bank account.
Following his bankruptcy the investigation into his affairs determined that Mr Jones had spent his bonus by repaying approximately £1,700 to his creditors and the remainder in the following manner:
- repaying a debt that he owed to his mother
- repaying his wife’s creditors
- paying for a holiday
It was determined that Mr Jones had acted to the detriment of his general bodies of creditors. The restrictions of his bankruptcy were subsequently prolonged in March 2008 for a period of three years.
As well as the general conduct of Mr Jones a contributing factor to the decision may have the transaction with his mother. Depending on the facts, this could have possibly been a preference transaction that may have been subject to a challenge from the trustee. Whether or not that would happen is a can of worms. For more information see previous transactions.
Whether or not Mr Jones would have expected this consequence would depend on the advice he would have received prior to going bankrupt. There are certainly a number of issues that would should have been raised with him before he petitioned at court.
For more information go to the bankruptcy restrictions order page.
Mrs James had two issues of unfit conduct raised during the investigation into her affairs. As a result of the investigation it was decided that she should enter in to a bankruptcy restrictions undertaking for a period of eight years.
The first issue arose when it was established that, with the knowledge that a bankruptcy petition was being presented against her, Mrs James drew on a cheque received in advance payment of some goods. The amount of the cheque was approximately £19,000. The withdrawal by Mrs James created an unauthorised overdraft of approximately £20,500.
The second issue arose when it was established that Mrs James had provided misleading information to the Official Receiver about a divorce settlement she had received to the value of £17,000 approximately one month after the making of the bankruptcy order.
As a result of the allegations against her Mrs James had the restriction of her bankruptcy extended for a period of eight years.
It is worth stressing here that behaviour such as failure to disclose and concealment can lead to an offence being committed. Such offences are punishable by imprisonment, a fine or both. For more information please see the bankruptcy offences page.
