BCR Advisory Office

Budniok v Adjudicator, Insolvency Service [2017] EWHC 368 (Ch)

This article was sourced from Ashfords. Article by Olivia Bridger and Alan Bennett.

Chief Registrar Baister overturned the Adjudicator’s decision in refusing to grant a Bankruptcy Order where the Debtor’s COMI was an issue.

Mr Budniok, a German citizen who had recently moved to London, applied online for a Bankruptcy Order in England. After several requests for further information, the Adjudicator was not satisfied Mr Budniok’s centre of main interests (“COMI”) was in England and as such refused the application. Mr Budniok appealed.

Mr Budniok worked for Blackpearl, which the Adjudicator said advised individuals on the English insolvency regime being more favourable than Germany, and how to give the illusion of living in England. The Adjudicator was further of the view there was no proof that Mr Budniok was paying rent on his English flat, which he claimed was being paid for by his company. Mr Budniok claimed that he moved to the UK to pursue a relationship.

In order to make a Bankruptcy Order, the Adjudicator must be satisfied with the requirements set out in s.263K Insolvency Act 1986. It was clarified that the word satisfied should be given its ordinary, natural meaning – the Adjudicator must be satisfied on an objective basis, she could not reach her decision capriciously and had to review the material in a bona fide manner.

There was discussion as to whether the present case would constitute an appeal. It was found that this refers to both an appeal from a decision of the court, as well as appealing an officeholder’s decision e.g. not to accept a Proof of Debt.

It was noted that in an appeal to the Adjudicator, no new information or documents should be considered, however when an appeal makes its way to court, the court may hear new evidence. In particular, Chief Registrar Baister stated that if CPR 52 applied, the court should not admit fresh evidence. However, he noted that there may be occasions when, in the interests of justice, the court would wish to take a more relaxed approach, such as where more information, witness statements or cross-examination are required. This would in particular be the case where the Debtor’s COMI was in issue.

The Adjudicator adopted a neutral stance in relation to the appeal and only instructed counsel with the sole purpose of assisting the court.

Chief Registrar Baister noted the tight constraints under which an Adjudicator must make a decision in a Debtor’s own petition, including time and the nature and extent of information that can be requested and the investigations undertaken, making it impossible to conduct an inquiry of the depth required when a Debtor’s COMI is in question. The Chief Registrar commented that it was regrettable that there was no provision for Adjudicators to refer questions to the court on a limited number of occasions, such as this.

The Adjudicator had refused the application on the basis that Mr Budniok’s job was thought to be suspect, and his arrangements with his employer, i.e. paying his rent, were somewhat ‘strange’. Blackpearl’s business was reviewed and Chief Registrar Baister stated that he found nothing objectionable about their activities, and that there was no suggestion that the company was doing anything illegal or dishonest. The Chief Registrar found that in doing this, the Adjudicator had given too much weight to considerations of limited significance.

Chief Registrar Baister found that Mr Budniok’s evidence and documents amply demonstrated that he had been resident and had been carrying on administration of his financial and consumer interests in England since June 2014. Mr Budniok’s COMI is now and was at the material time in England, and as such the Adjudicator ought to have been satisfied she had jurisdiction to make a Bankruptcy Order. Chief Registrar Baister allowed the ‘appeal’, and made the Bankruptcy Order.

For specialist advice regarding your specific circumstances, please contact the BCR team.

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BCR team
The BCR Advisory team are a national represented firm with its main office located in Sydney. It is a boutique corporate advisory, recovery and insolvency firm that specialise in the SME market. The team’s reputation is built on their extensive experience within the industry as well as their fresh and innovative approach to problem solving for distressed business owners.Let us know what you thought about this article by leaving a comment below. Alternatively, you can get in touch with the BCR Advisory through our contact page.