As from 1 October 2015 the Insolvency Act 1986 (Amendment) Order 2015 (SI 2015/922 has amended Section 267(4) of the Insolvency Act 1986 such as to increase the bankruptcy level for a creditor’s bankruptcy petition from £750 to £5,000.
Accordingly, for undisputed debts less than £5,000 a Statutory Demand will no longer be available to enforce an undisputed debt. Similarly, litigated County Court proceedings will need to be used to enforce a debt, but can only leading to either Charging Order proceedings (against fixed assets, mainly property) or Warrants issued by the Court Bailiff against moveable items of value.
This streamlines the Bankruptcy process and will undoubtedly lead to a sharp decrease in bankruptcies in England and Wales and coordinates with recent legislation, which is intended to remove or mitigate the consequences of small debts and also although for the inflation has occurred since the Insolvency Act 1986 was introduced.
Whilst useful to debtors this may have severe consequences for Asset Based Lenders and small businesses, all of which may have numerous debts below the Bankruptcy limits.
If you would like to discuss any aspects of these changes (or any other changes introduced by the Act as mentioned in the previous blogs), please contact my colleagues at Francis Wilks & Jones. Our website can be found at Francis Wilks & Jones
Solicitor and Managing Partner at Francis Wilks & Jones