Skip to main content

The case of Boris Franz Becker (“BB”) shows how a bankrupt obtains their discharge from bankruptcy restrictions after it has been suspended

In the matter before Insolvency and Companies Court Judge Briggs, Becker (A Bankrupt) v Ford & Ors [2024] EWHC 1001 (Ch), BB obtained his discharge from bankruptcy in what Judge Briggs said “Mr Becker clearly falls on the right side of the line“.

When an individual goes bankrupt they have restrictions that affect their financial dealings. Perhaps the most obvious restriction on a bankrupt is the ability to obtain credit by borrowing more than £500 from someone without providing notice to them that a bankrupt is indeed an undischarged bankrupt.

How A Bankrupt Obtains Their Discharge From Bankruptcy Restrictions

Other restrictions may include being unable to:

  • Act as a company director without the court’s permission.
  • Working as an Insolvency Practitioner.
  • Seeking employment in the army or police without notice of the status of bankruptcy.
  • Being a member of certain recognised professional bodies.
  • Being an MOT examiner.
  • Being an estate agent self employed or as the owner of an estate agency.
  • Acting as a charity trustee or of a pension scheme.

Suspension Of Discharge From Bankruptcy

Under Section 279 of the Insolvency Act 1986 the standard period of time that a bankrupt remains under the bankruptcy restrictions is for one year. However, if a bankrupt fails to cooperate with the Official Receiver or their Trustee in Bankruptcy an application can follow to court which can lead to the suspension of their discharge.

The reason for this is when a Trustee in Bankruptcy is parachuted into office to assume control of the bankrupt’s assets, he or she starts with a blank sheet of paper. They do not know the bankrupt and need cooperation to enable the assets to be identified, discovered and then hoovered up for the benefit of the bankruptcy estate and its creditors.

Purpose Of Suspense Of A Bankrupt’s Discharge

The purpose behind the suspension is to achieve compliance so that the bankruptcy estate can be properly wound up. 

In order for a Trustee in Bankruptcy to get in, realise and distribute the bankrupt’s property he or she needs access to full and frank disclosure from the bankrupt as to the nature and extent of the assets in question. But it goes further than this as it is not unknown for the build to bankruptcy to result in individuals taking steps to vary the appearance of and potential ownership of their assets. 

Restrictions On Moving Assets Around

The more an individual might have to lose to their creditors, perhaps particularly when debts are materially disputed, then conceivably the greater the risk steps might be taken to move assets around. However, the law does not permit such activities. 

Steps taken to move assets into other people’s names are not merely frowned upon but the Insolvency Act 1986 specifically recognises this as a possibility and provides restrictions on this by way of what is known as bankruptcy offences. Such bankruptcy offences are those of non-disclosure of assets under Section 353 of the Insolvency Act 1986 and the concealment of property under Section 354 of the Insolvency Act 1986. They are comprised within Part IX Chapter VI of the Insolvency Act 1986 referred to as the wrongdoing by the bankrupt before and after bankruptcy

Not only this, it goes further as it enables the Trustee to set aside transactions at undervalue and preferences known legally antecedent transactions. The effect of this can result in the clawback of assets moved around to enable the Trustee to bring them back into the control of the bankruptcy estate, to then hopefully after the costs of the bankruptcy be distributed to creditors.

Release From Bankruptcy Restrictions After Discharge Suspended

The court in BB considered the authorities on the test for releasing a bankrupt from restrictions after a suspension of their discharge.

It considered the distinction between the individual who seeks to be as difficult as possible compared with one who tries but might still fail to fully comply:

The court may find that the bankrupt has not completely fulfilled his obligations. In these circumstances the court must understand the failure and the impact the failure(s) have on the ability of the officeholder to carry out his or her obligations. The courts recognise that there is a ‘spectrum between bankrupts who are being as difficult as possible and doing everything to frustrate the trustee’s inquiries, and those who are in the main cooperative and seeking to provide information to the trustee but have nevertheless failed to comply properly with their obligations’: Hilsdon v Weir [102]. If the failure falls into the latter category it is axiomatic that the court will ask whether the failure is material and if the cost of remaining bankrupt is so disproportionate that the suspension should be lifted. This is because even after discharge, a bankrupt still must provide information to the trustee. The difference is that the restrictions are lifted and criminal sanctions for non-compliance are no longer applied.

To the same end, it should be borne in mind that the legislation does not impose a requirement, at least not expressly, that discharge is conditional on full compliance: Shierson and Birch v. Rastogi (A Bankrupt) [65].

It is sufficient, if the debtor can demonstrate that, objectively viewed, he or she has done all that he or she could reasonably do in the circumstances of the case in fulfilling any outstanding obligation previously identified: Keely v. Bell [10(b)], [20], [30] and [36].

Suspension Of BB’s Discharge From Bankruptcy Restrictions

On 31 May 2018, the Trustees of BB applied for the suspension of his discharge from bankruptcy.

Following proceedings in Southwark Crown Court BB was convicted of various Boris’ Bankruptcy Offences.

However, since then in November 2023 BB entered into a settlement agreement with his Trustees. An application was issued by BB which was heard on 15 February 2024 when the suspension of discharge was lifted.

BB’s application said he has now done all he can do to assist the Trustees in the administration of the bankruptcy. Notably in respect of the Trophies.

Although BB’s Trustees in Bankruptcy adopted a neutral stance in relation to his application for freedom from bankruptcy restrictions nevertheless the court highlighted the following issue:

The joint trustees are “neutral” on the Application. However, Mr Ford says in his witness evidence:

“Whilst the Trustees are not aware of any specific outstanding issues in terms of his statutory obligations to the Trustees, particularly given Mr Becker’s past conduct as a bankrupt culminating in his imprisonment…they do not feel able to positively confirm that he has complied with his obligations under Part IX of the Insolvency Act 1986, either to the best of his abilities or otherwise.”

I commented at the hearing that I found this statement curious. The joint trustees should know if there are specific outstanding issues. The reason relied on for not being able to confirm Mr Becker’s compliance, rests on his “past conduct culminating in his imprisonment”. The position taken by the joint trustees does not sit well with the statement that they are unaware of a failure to comply with any obligation. The fact that his past conduct led to a term in prison is not a relevant factor to take into account when deciding if Mr Becker has complied with his obligations.

The joint trustees would have done better if they had asked themselves whether there was sufficient evidence to succeed on an application to suspend discharge, by reference to section 333 of the 1986 Act namely, (i) has the bankrupt failed to provide information to the joint trustees that has been reasonably required; (ii) has the bankrupt failed attend on the trustee at any time when reasonably asked to do so; (iii) has the bankrupt failed to do ‘all such other things’ as the joint trustees may for the purposes of carrying out their functions under Part IX of the 1986 require. This may have enabled them to objectively view the current state of affairs. The answer to the question would clearly be answered in the negative.

There is no doubt that Mr Becker made poor choices in the past, but Mr Becker’s past conduct should not be held against him indefinitely.

There has been no evidence filed and served by or on behalf of the official receiver.

There is one unresolved matter, namely the location of certain trophies that are missing but this is provided for within the settlement deed. Mr Becker has confirmed that he has no further information relating to their location. He has also confirmed that he would have no objection to the trophies being minted, turned into, attached to or monetised as non-fungible tokens. As the joint trustees are concerned to realise and distribute assets this offer provides a commercial outcome.

On the spectrum of bankrupts who range from “difficult as possible and doing everything to frustrate the trustee’s inquiries” to cooperative, providing information and delivering up assets, Mr Becker clearly falls on the right side of the line.

GET IN TOUCH FOR HELP

For a free no obligation chat about any of the matters detailed above, please do get in touch for help. An expert will call you back or if you prefer exchange emails.

We can explore your situation and consider the best way to help you and your business needs. You can call us 020 3925 3613 or fill in the form below and will get back to you quickly. We Know Insolvency Inside Out.

Author: Elliot Green
Last Updated: June 12, 2024

Please enable JavaScript in your browser to complete this form.

Name

100% Confidential Advice
We Know Insolvency Inside Out

Share This Page!

What Next?

Expert Advice Is Just A Click Away

If you have any questions in relation to How A Bankrupt Obtains Their Discharge From Bankruptcy then contact us as soon as possible for advice. Oliver Elliot offers a fresh approach to insolvency and the liquidation of a company by offering specialist advice and services across a wide range of insolvency procedures.

Our expertise is at your fingertips.

Please enable JavaScript in your browser to complete this form.
Name

By submitting this form you agree with the storage and handling of your data by Oliver Elliot. For more details, please read our Privacy Policy.

Opt in

Disclaimer: How A Bankrupt Obtains Their Discharge From Bankruptcy

This page is not legal advice and is not to be relied upon as such. This article How A Bankrupt Obtains Their Discharge From Bankruptcy is provided for information purposes only. You should take independent advice on the facts of your case. No liability is accepted for reliance upon this post.

Recent Posts / View All Posts

Remove a Trustee in Bankruptcy

Misconduct Is Not Required To Remove A Trustee In Bankruptcy

| Bankruptcy | No Comments
The case of Mokhtar v Piscopo FCA 493 (“M v P”) evidences that misconduct is not required to remove a Trustee in Bankruptcy. This was a case in which relations…
How A Bankrupt Obtains Their Discharge From Bankruptcy Restrictions

How A Bankrupt Obtains Their Discharge From Bankruptcy

| Bankruptcy | No Comments
The case of Boris Franz Becker (“BB”) shows how a bankrupt obtains their discharge from bankruptcy restrictions after it has been suspended.  In the matter before Insolvency and Companies Court…
Can A Bankrupt Stay A Bankruptcy

Can A Bankrupt Stay Their Bankruptcy And Stop Their Trustees? The Tangles Of Tanglewood

| Bankruptcy | No Comments
To consider the gripping subject; can a bankrupt stay a bankruptcy and stop their Trustees let’s absorb the facts and analysis fleshed out by Mrs Justice Bacon from the case…
Exceptional Circumstances Delays Trustees’ Possession Of Bankrupt’s Home

Exceptional Circumstances Delays Trustees’ Possession Of Bankrupt’s Home By Over 8 Years 

| Bankruptcy | No Comments
In the matter of Re Audun Mar Gudmundsson (a Bankrupt) EWHC 759 (Ch) exceptional circumstances delays the repossession of a bankrupt’s home by over 8 years. This is a case…
Elliot Green

Licensed Insolvency Practitioner & Chartered Accountant. We Know Insolvency Inside Out.

Leave a Reply