Dusoruth v Orca Finance UK Ltd: clarification on “liquidated debt”
The Court has considered what constitutes a “liquidated” sum under s.267(2) Insolvency Act 1986, for the purpose of presenting a bankruptcy petition.
In this case the judge held that restitution based on unjust enrichment was, by its nature, not a “liquidated” sum, even if the creditor can specify an exact amount that they are claiming. However, ICC Judge Mullen did stipulate that, even if the petition debt was not for a liquidated sum (but the bankruptcy order was made, and the bankrupt subsequently applies to annul the bankruptcy order), the Court still has discretion as to whether or not to annul that order.
On the facts of Dusoruth, ICC Judge Mullen decided not to make an annulment order, based on the bankrupt’s uncooperative attitude and the existence of other indisputable creditors.
When drafting a bankruptcy petition, practitioners should be mindful to check that a creditor’s petition debt is for a legitimate, liquidated sum, especially in instances where the claim is not based on a straightforward money debt.
The full judgment can be accessed here.