Robertson v Wojakovski

Where a petitioning creditor establishes an undisputed bankruptcy debt and the statutory requirements are satisfied, the creditor is prima facie entitled to a bankruptcy order. An adjournment to allow time for payment is exceptional. The debtor must provide credible and convincing evidence of a reasonable prospect of paying within a reasonable time.

Because bankruptcy is a class remedy, the court must consider undisputed debts owed to supporting creditors. Payment of only the petition debt cannot justify an adjournment where the debtor could not pay the supporting creditors. Bare assertions about assets, future distributions or possible realisations are insufficient.

Rachel Robertson presented a bankruptcy petition against Edward Wojakovski based on an unsatisfied statutory demand for £135,244.90, representing an interim costs payment ordered after proceedings against him were struck out for failure to provide security for costs.

The debt was undisputed and there was no substantive opposition to the petition. The debtor sought an adjournment to obtain time to pay, relying principally on asserted artwork assets and the prospect of future distributions from companies in which he held interests. Supporting creditors were owed approximately £16 million. The central issues were whether the debtor had a reasonable prospect of paying the relevant debts within a reasonable time and whether the court should take the supporting creditors’ debts into account.

1. Bankruptcy order. The debtor accepted that the petition debt was undisputed and that there was no basis to oppose the petition. The court therefore made a bankruptcy order.
2. Relevant debts on an adjournment application. Bankruptcy is a class remedy, not merely a debt-collection process. Where there are undisputed debts owed to supporting creditors, the court must take those debts into account when deciding whether to adjourn a petition to allow time for payment. Otherwise, payment of the petitioning creditor could prefer that creditor and lead to substitution by a supporting creditor at the adjourned hearing. Such payment could also constitute a void disposition under section 284 of the Insolvency Act 1986.
3. Reasonable prospect of payment. The debtor had to provide credible evidence of a reasonable prospect of paying both the petition debt and the supporting creditors’ undisputed debts within a reasonable time. The evidence concerning artwork did not establish ownership, value, or realistic realisation within that period. The proposed transfer to receivers would not produce cash or resolve ownership.
4. Future distributions. The asserted value of company assets and possible shareholder distributions was uncertain. The evidence did not establish the relevant asset values, tax liabilities, or the timing of any distribution. Nor was the delay attributable solely to another shareholder. The suggested unfairness therefore provided no basis for an adjournment.
5. The application for an adjournment was dismissed and the bankruptcy order was made on handing down.