McFeely, a Bankrupt
| Jurisdiction | Ireland |
| Judge | Ms. Justice Costello |
| Judgment Date | 01 June 2016 |
| Neutral Citation | [2016] IEHC 299 |
| Docket Number | [2012 No. 2431 BANKRUPTCY] |
| Court | High Court |
| Date | 01 June 2016 |
IN THE MATTER OF
SECTION 85A OF THE BANKRUPTCY ACT 1988, AS AMENDED
AND
IN THE MATTER OF
THOMAS MCFEELY, A BANKRUPT
[2016] IEHC 299
Costello J.
[2012 No. 2431 BANKRUPTCY]
THE HIGH COURT
BANKRUPTCY
Bankruptcy – S. 85A of the Bankruptcy Act 1988 – Extension of period of bankruptcy – Non-cooperation with official liquidator – Age as factor in reduction of period of bankruptcy – Duties of bankrupt
Facts: The official assignee had filed the present application under s. 85A of the Bankruptcy Act, 1988, for extension of the period of bankruptcy of the bankrupt on the grounds that the bankrupt had failed to cooperate with the official assignee in realisation of assets. The official assignee contended that there was a wilful refusal on the part of the bankrupt to furnish his actual address and non-disclosure of assets and interests in several properties. The bankrupt objected to the entry of the official assignee into the premises leased by the bankrupt to a third party/lessee and taking of possession of certain documents from the lessee.
Ms. Justice Costello granted an order for extension of the period of bankruptcy of the bankrupt and allowed the reduction of two months from the date of discharge taking in lieu the age of the bankrupt. The Court observed that s.27 of the Bankruptcy Act, 1988, did not allow the official assignee to enter into any premises without seeking prior permission notwithstanding the fact that it was a vacant premises. The Court found that there was ample evidence that showed that the bankrupt had knowingly prohibited the official assignee from carrying out its statutory obligations and thus, it was appropriate that an order for extension of bankruptcy could be made. The Court observed that the age of the bankrupt could be taken into account while extending the period of bankruptcy, thereby allowing for reduction in the said period; however, that was dependent upon the circumstances of a case. The Court held that the Act of 1988 permitted the official assignee to interview the bankrupt for realisation of the relevant assets and the bankrupt must provide his full support and co-operation to an official assignee.
The bankrupt, Mr. Thomas McFeely, formerly of 2 Ailesbury Road, Ballsbridge, Dublin 4, is a well known former property developer in both Ireland and the United Kingdom. As with many property developers, he encountered severe financial difficulties and petitioned for his own bankruptcy in London and on 13th January, 2012, he was adjudicated a bankrupt in London. While a bankrupt he prepared a statement of affairs for his trustee in bankruptcy as he was required to do under the relevant insolvency legislation applicable in England and Wales. His bankruptcy in England was annulled on 15th June, 2012.
A creditor of Mr. McFeely petitioned for his bankruptcy within this jurisdiction. On 30th July, 2012, Dunne J. held that his centre of main interests was in Ireland and she adjudicated him a bankrupt in the state. At the date of his adjudication, his residence was 2 Ailesbury Road, Ballsbridge, Dublin 4, but the house was in the process of being repossessed and shortly thereafter NAMA took possession of the house.
Upon his adjudication as a bankrupt, all of his property and assets became vested in the Official Assignee. Mr. McFeely, as a bankrupt, became subject to various statutory obligations which are imposed upon all bankrupts pursuant to the Bankruptcy Act 1988, as amended. In particular, he became subject to the obligations set out in ss. 19 and 20 of the Act. The relevant sections provide as follows:-
‘19.—The bankrupt shall—
(a) unless the Court otherwise directs, forthwith deliver up to the Official Assignee such books of account or other papers relating to his estate in his possession or control as the Official Assignee may from time to time request and disclose to him such of them as are in the possession or control of any other person;
(b) deliver up possession of any part of his property which is divisible among his creditors under this Act, and which is for the time being in his possession or control, to the Official Assignee or any person authorised by the Court or otherwise under the provisions of this Act to take possession of it;
(c) unless the Court otherwise directs, within the prescribed time file in the Central Office a statement of affairs in the prescribed form and deliver a copy thereof to the Official Assignee;
(d) give every reasonable assistance to the Official Assignee in the administration of the estate;
…
20.—(1) A bankrupt shall forthwith notify the Official Assignee in writing of any change in his name or address which occurs during his bankruptcy.’
It follows that the bankrupt was obliged to furnish the Official Assignee all of the documentation that he had in relation to his estate and insofar as there was documentation in the possession of third parties he was obliged to identify that documentation and the parties who had possession of the documentation to the Official Assignee. He was required to swear a statement of affairs which must disclose all of his assets. He was obliged to deliver up possession of all of his property to the Official Assignee. He was obliged to confirm his name and address. If during his bankruptcy he changes his address or leaves the jurisdiction, he is obliged to notify the Official Assignee.
The Act confers various powers upon the Official Assignee to enable him to carry out his functions and obligations under the Act. He is entitled to interview the bankrupt and persons who may have information relevant to the assets of the bankrupt and the realisation of those assets. If persons having relevant information do not assist the Official Assignee, he may bring an application for leave to have the individual examined by the court pursuant to s. 21 of the Act. Automatically upon adjudication a s. 27 warrant of seizure is granted to the Official Assignee which provides as follows:-
‘27.—(1) The Court may by warrant direct the Bankruptcy Inspector or any of his assistants to seize any property of the bankrupt.
(2) An official acting under the warrant may seize any part of the bankrupt's property in the possession or control of the bankrupt and, for the purpose of seizing any such property, may enter and if necessary break open any house, building, room or other place belonging to the bankrupt where any part of his property is believed to be.’
In addition, where there may be assets or records of the bankrupt on premises other than those of the bankrupt, it is open to the Official Assignee to apply for a warrant pursuant to s. 28 of the Act which provides as follows:-
‘28.—Where it appears to the Court that there is reason to believe that any property of the bankrupt is concealed in any house, building, room or other place not belonging to the bankrupt, the Court may grant a search warrant to the Bankruptcy Inspector or any of his assistants, or other person appointed by the Court, who may execute the warrant according to the tenor thereof.’
Cooperation, first and foremost by the bankrupt, but by others also, with the Official Assignee is absolutely essential to the operation of the bankruptcy process. Quite simply, it cannot operate without the full cooperation of bankrupts. They have the information in relation to their estates and normally have possession of both the property and the relevant documentation or the relevant information and/or documentation is in the possession of their accountant, solicitor or other agents. It is essential to the integrity of the bankruptcy regime that the various obligations imposed by the Act on each bankrupt personally are observed and complied with fully and to the best of their respective abilities. There is no such thing as a minimum threshold of cooperation. It is for this reason that the Oireachtas has conferred a power upon the court to extend the period of bankruptcy and not to permit the automatic discharge from bankruptcy after the expiration of three (and now one) years from the date of adjudication where the court is satisfied that there has been either non-cooperation by the bankrupt with the Official Assignee in the conduct of the bankruptcy or there has been a failure to disclose assets or an attempt to hide assets from the Official Assignee. Section 85A(1) and (4) of the Act provides as follows:-
‘(1) The Official Assignee, the trustee in bankruptcy or a creditor of the bankrupt may, prior to the discharge of a bankrupt pursuant to section 85, apply to the Court to object to the discharge of a bankrupt from bankruptcy in accordance with section 85 where the Official Assignee, the trustee in bankruptcy or the creditor concerned believes that the bankrupt has—
(a) failed to co-operate with the Official Assignee in the realisation of the assets of the bankrupt, or
(b) hidden from or failed to disclose to the Official Assignee income or assets which could be realised for the benefit of the creditors of the bankrupt…
(4) Where the court is satisfied that the bankrupt has—
(a) failed to co-operate with the Official Assignee in the realisation of the assets of the bankrupt, or
(b) hidden from or failed to disclose to the Official Assignee income or assets which could be realised for the benefit of the creditors of the bankrupt,
the Court may where it considers it appropriate to do so, order that in place of the discharge provided for in section 85 the bankruptcy shall stand discharged on such later date, being not later than the 8th anniversary of the date of the making of the adjudication order, as the Court considers appropriate.’
This application was brought by the Official Assignee...
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