Insolvency Act 1986, section 266

Other preliminary conditions

Part IX Bankruptcy

(1)Where a bankruptcy petition relating to an individual is presented by a person who is entitled to present a petition under two or more paragraphs of section 264(1), the petition is to be treated for the purposes of this Part as a petition under such one of those paragraphs as may be specified in the petition.

(2)A bankruptcy petition shall not be withdrawn without the leave of the court.

(3)The court has a general power, if it appears to it appropriate to do so on the grounds that there has been a contravention of the rules or for any other reason, to dismiss a bankruptcy petition or to stay proceedings on such a petition; and, where it stays proceedings on a petition, it may do so on such terms and conditions as it thinks fit.

(4)F672Without prejudice to subsection (3), where a petition under section 264(1)(a) ... or (c) in respect of an individual is pending at a time when a criminal bankruptcy order is made against him, or is presented after such an order has been so made, the court may on the application of the Official Petitioner dismiss the petition if it appears to it appropriate to do so.

Cases considering section 266 22

Strategic Advantages PC (for and on behalf of HSG Rooftops SP) v Gary Ronald Forrest

[2023] EWHC 3144 (Ch) · 4 May 2023

The application to withdraw or dismiss the bankruptcy petition was made under section 266(2). The court treated dismissal as procedurally available in the circumstances, given the parties’ agreement and the supporting creditors’ lack of interest in continuing the proceedings (see paras [2]-[4]). The application to withdraw or dismiss the bankruptcy petition was also made under section 266(3). The court dismissed the petition where no supporting creditor sought substitution or carriage (see paras [2]-[4]).

Nakamura v Armstrong

[2021] EWHC 654 (Ch) · 24 March 2021

The court considered whether bankruptcy would serve no useful purpose. Because assets were available for realisation and no better outcome for creditors was shown, the exceptional discretion not to make a bankruptcy order was not exercised. (see paras [28], [67])

State Bank of India & Ors v Mallya

[2020] EWHC 1981 (Ch) · 22 July 2020Limits

Section 266(3) confers a general power to dismiss a petition for contravention of the rules or another appropriate reason. The court held that this discretion cannot take account of security over third-party assets where section 383(2) makes the debtor’s property the relevant subject (see paras [43], [48]-[51]).

2 more judgments, and what each says about section 266, are in the case-law panel in the full Act.

Amendments and notes

3 notes from legislation.gov.uk

Amendments

  1. F672Word in s. 266(4) omitted (6.4.2016) by virtue of Enterprise and Regulatory Reform Act 2013 (c. 24), s. 103(3), Sch. 19 para. 8; S.I. 2016/191, art. 2 (with art. 3)

Modifications

  1. C947S. 266 modified (1.12.1994) by S.I. 1994/2421, art. 11(2)(3), Sch. 7 para. 4
  2. C948S. 266 applied with modifications by S.I. 1986/1999, art. 3, Sch. 1 Pt. 2 (as amended (31.5.2002) by S.I. 2002/1309, art. 3(2)(4) and as amended (31.12.2020) by The Insolvency (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/146), reg. 1(3), Sch. para. 108(2)(c) (with regs. 4, 5); 2020 c. 1, Sch. 5 para. 1(1))