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Bankrupt refused stays where there is a risk that assets would be dissipated beyond recovery

By: James Cross BL

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High Court refuses application to stay orders granting permission to proceed with applications to extend a bankruptcy and allowing the Official Assignee to take steps to protect the assets or income of the bankrupt’s estate in light of evidence of the dissipation of the bankrupt’s assets, on the grounds that refusing the stay gives rise to a real risk of irremediable prejudice to creditors where there is a risk that the bankrupt’s assets can be dissipated beyond recovery.

Bankruptcy – stay application - adjudicated bankrupt – Court refused stay application - Court of Appeal extended the time for appeal – stay granted without the Official Assignee being on notice - Official Assignee then applied to the Court of Appeal and the stay was varied - debtor was to cooperate regarding disclosure of his assets – appeal dismissed - bankrupt’s pension was liquidated and given to his wife – third stay application – granted - Court of Appeal stayed execution - in addition to the dissipation of the pension, a further €53,118. 27 was collected from various debtors and tenants and dissipated by the bankrupt – Official Assignee brought motions to extend bankruptcy and liberty to get in and to protect assets or income of the bankruptcy estate - reliefs granted - Supreme Court gave leave to appeal against the Court of Appeal decision on the adjudication in bankruptcy - bankrupt appealed to the Court of Appeal against my order varying the stay - in effect a fourth stay - complained in the notice of appeal of not having had an adequate opportunity to address the two motions – without prior notice the bankrupt made a fifth stay application - whether the order varying the stay should itself be stayed - not valid to say there is not prejudice because the bankrupt has already dissipated assets - a further stay would only allow that process to continue - effect of granting a stay would be to entirely reverse the previous order - whether to grant a stay is a matter of weighing the balance of justice and the respective prejudice of granting or not granting such an order - refusing a stay does cause prejudice to the bankrupt, but it is not irremediable prejudice because in the event of the bankrupt winning the Supreme Court appeal and exiting from bankruptcy, then any steps can be reversed and money given back - refusing a stay, however, runs the risk of creating irremediable prejudice to creditors because assets can be dissipated beyond recovery – not a theoretical concern - a real risk of irremediable prejudice to creditors both in general and on the facts of this particular case - prejudice involved simply by the lapse of time - clearly significantly in the interests of creditors that there would not be a stay on the order – stay refused –

Note: This is intended to be a fair and accurate report of a decision made public by a court of law. Any errors should be notified to the editor and will be dealt with accordingly.

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