Jan 26 2005
Marc Landsman, Licensed Insolvency Practitioner of Carmichael & Co in Manchester successfully showed that bankrupts cannot have expect to get their own way every time in an appeal Hearing before Mr Justice Lindsay in the High Court in London on 25 January 2005.

In 2000, a debtor entered an Individual Voluntary Arrangement, but did not maintain the payments required, and ultimately the Supervisor, brought a bankruptcy petition against the debtor. After several adjournments over six months, in September 2004 the District Judge in Nottingham County Court made a bankruptcy order. One of these adjournments had been for the debtor to offer a further IVA, which was rejected by creditors

As part of the application, Marc Landsman had included a request to be appointed Trustee in Bankruptcy in accordance with Section 297(5) of the Insolvency Act 1986. Several creditors (including the Crown) confirmed that they had no objection to the appointment being made, none raised any objections. The only objection to the appointment was from the bankrupt. This was provided orally, with no Intention to Oppose or any evidence having been lodged in advance. The main reason given was that Marc Landsman was not the original Supervisor, having been appointed by the Court in place of the previous Joint Supervisors when they had retired from a previous firm employing both them and Marc Landsman. The District Judge decided that this was sufficient reason to exercise his discretion not to appoint Marc Landsman as Trustee in Bankruptcy.

Having heard argument from Martin Ouwehand (11 Stone Buildings) on behalf of Marc Landsman, Mr Justice Lindsay commented that the District Judge had clearly recognised the advantage of the Supervisor of the Voluntary Arrangement becoming Trustee in Bankruptcy since a person with existing knowledge of a case is best, as otherwise the creditors must pay again for the newcomer to become familiar. Looking to the grounds upon which an appeal could be considered he said that justice must be seen to be done providing clear reasons to render practicable the exercise of any right of appeal. He then said that the District Judge had taken into account a factor which should not have been taken into account, and therefore the exercise of his discretion was flawed. He therefore appointed Marc Landsman as Trustee in Bankruptcy.

Robert Festenstein of RHF Solicitors in Manchester representing Marc Landsman commented “For a long time debtors have been able to muddy the waters to avoid the former Supervisor being appointed as Trustee in Bankruptcy. Hopefully this decision will help clarify the position.”

Marc Landsman said “The Enterprise Act heralded a new debt forgiving culture, but only where it is appropriate. A bankrupt must remember that the Trustee in Bankruptcy is there to get as much as possible for the creditors, and this is done by selling the bankrupt’s assets. If the bankrupt has the right of veto over the Trustee’s appointment choosing only someone he thought would be kind to him it could seriously affect the real losers – the people and companies owed money by the bankrupt.”