Bankruptcy - discharge and proofs of debt
Date: Wednesday 16th January, 2008
Author: Chris Laughton
Profile: Chris Laughton
Three interesting procedural points relating to the bankruptcy of individuals arose in Law Society v Dixit Shah  EWHC 2841 (Ch), where recovery was sought from bankrupt solicitors' professional indemnity insurers.
- Discharge of a bankrupt merely extinguishes a creditor's remedy of enforcement, not the underlying cause of action.
- The court can accept or reject a proof of debt (under its general jurisdiction from Section 363 of the Insolvency Acy 1986) without the trustee having considered the matter first.
- A proof may be admitted or rejected for reasons other than determining a right to vote or participate in a dividend, where the proof of debt procedure is directed to satisfying the claim of a legitimate creditor (here, through the Third Party (Rights against Insurers) Act 1930) without any possible harm to any other creditor.
Floyd J appeared determined to ensure that legal technicalities should not prevent the third party claimants being able to recover from the insurers. Read the judgment (link above) for more detail.
Keywords: bankruptcy discharge 'proof of debt' 'Law Society' 'Dixit Shah' 'bankrupt solicitors' 'professional indemnity' 'Third Party (Rights against Insurers) Act' ' EWHC 2841 (Ch)' 'Floyd J'
Please note that the opinions expressed in this blog represent the views of the author and not the views of Mercer & Hole.