DMBM666420 - CCP: action after judgment obtained: judgment debtor becomes insolvent
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Insolvency
Where you learn of a debtor's insolvency (INS2107) following entry of judgment, you should write to the court telling them that the debtor is insolvent and you will take no further proceedings.
Treat any unpaid fees and costs not awarded by the court as irrecoverable (as in INS2303).
Follow the guidance in INS2107, as appropriate, to refer the debt(s) to ICHU.
Company administration
From the time that a Notice of Intention to appoint an administrator is filed at the court you are effectively prohibited from instituting or continuing any legal process against a company or the property of the company.
If you become aware that an application has been made it will be necessary to halt any proceedings but you should not formally withdraw the case. If an administrator is not appointed you should continue the action.
When you are informed that an administrator has been appointed
- do not start any new proceedings against the company
- advise the court to suspend any action in an existing case, for example a warrant of execution
- follow the guidance at INS2105 or 2107 as appropriate.
Voluntary arrangements
In Individual Voluntary Arrangement cases, refer to INS3310.
Partnerships
If a partner becomes bankrupt, responsibility for payment of partnership debts remains with the surviving partners (sometimes called the ‘standing-up’ partners) as long as any one of them one remains. You should always continue action against the surviving partner(s).
See INS9581 onwards for details of what is claimed in the bankruptcy.
The same situation applies if one of the partners enters into a voluntary arrangement, for as long as the voluntary arrangement is operative.