Important case on the duty of disclosure in Bankruptcy
Ireland has become noticed for having a relatively benign bankruptcy regime as a result of a dramatic transformation of our Bankruptcy Laws over the last decade or so. From a position of having a draconian regime where bankrupts could not get out of bankruptcy for 12 years the period is now a very manageable 12 months.
Applications for bankruptcy are made on an ex parte (i.e. one party only basis) .There is a significant onus on the Applicant to fully disclose all relevant financial details to the Court.This was recently highlighted in a case involving an applicant Oliver Kruuda who is an Estonian National who brought an application for bankruptcy in the Irish Courts. This application was challenged by a creditor on the basis that he had not disclosed the existence of existing Estonian proceedings nor had he disclosed certain relevant financial information.
In making a decision as to whether to set aside a bankruptcy the Court takes into account the following three factors:
1. Non-disclosure of material facts/information.
2. How culpable was the person who failed to make the disclosure.
3. The overall circumstances of the case.
The Court set aside the bankruptcy based on non-disclosure but also addressed the issue of jurisdiction i.e. whether the Irish Court had jurisdiction in circumstances where a creditor complained that there were already existing Estonian proceedings. It was very clear to the Irish Court that the proceedings in Estonia were categorised as “main insolvency proceedings” and as a result the High Court decided that it would not have dealt with the bankruptcy on jurisdictional grounds had it known this when the ex parte application was made. This is the first time that an adjudication Order for bankruptcy has been set aside for non disclosure in the application of a creditor.
For further information or advice on this or other related matters please contact Brendan Dillon or one of our other Solicitors on 01-2960666