Stephen Louis Nardelli & Anor v Desiman Limited

A bankruptcy order may be made where a guarantee debt has fallen due and there is no sufficient prospect of payment within a reasonable time. A possible future repayment of the principal debt does not necessarily justify adjournment, particularly where the evidence is uncertain and the debtor’s conduct has caused delay. An application to extend time remains distinct from an application for relief from sanctions, but the court may assess its likely outcome where that is necessary to determine whether the debtor can continue defending the petition. On appeal, the court may reconsider the decision itself where remittal would be unsuitable and may uphold the order on the evidence available at the appeal.

Stephen Louis Nardelli and Graham Johnson appealed bankruptcy orders made by ICC Judge Mullen on 13 September 2024. The orders followed their failure to pay a costs order and comply with directions in bankruptcy proceedings arising from their guarantees of debt owed by P3Eco (Bicester) Himley Ltd to Desiman Limited.

The appellants argued that an extant application to extend time meant that they were not in breach of the earlier unless order, that the application’s likely outcome should not have been anticipated, and that the underlying principal debt was expected to be repaid before the scheduled petition hearing. The central issues were whether the bankruptcy orders were procedurally and substantively justified, and whether the appeal should be remitted or determined by the appellate court.

1. Appeal dismissed. The bankruptcy orders and consequential orders made below were upheld.
2. The finding that there had been no technical breach of an order requiring payment by 2 August 2024 did not remove the effect of the unless order. The appellants had an extant application to extend time, but that application did not prevent the court from considering its likely outcome and the resulting bar on taking further steps without permission.
3. The judge was entitled to conclude that the extension applications were unlikely to succeed. The evidence did not address the matters identified by ICC Judge Prentis as relevant to an out-of-time application, and it was reasonable to assume that the evidence already filed would remain the evidence relied upon. The indications that the costs would be paid shortly were unsupported and emerged only at the end of submissions.
4. The judge was entitled to treat the appellants’ conduct as delaying tactics and to regard the guarantee liability as requiring prompt payment. A possible payment from associated companies in the following year did not establish a sufficient prospect of payment within a reasonable time or at all. Even if the word inevitable overstated the position, the prospects of avoiding bankruptcy were insufficiently strong to justify waiting for the anticipated payment.
5. Remittal was unsuitable. Reconsidering the matter, the court held that a bankruptcy order was still appropriate. The evidence of future repayment was unclear, and subsequent events showed that the expected £10 million instalment had been subject to competing marshalling claims and had not clearly discharged the principal debt by the anticipated hearing date.

• High Court (Chancery Division): Appeal from bankruptcy orders and related orders made by ICC Judge Mullen on 13 September 2024. Permission to appeal was granted by Mellor J on 9 April 2025. Appeal dismissed.