We last reported on the Aabar Block SARL and another v Glenn Maud bankruptcy proceedings (and related insolvency proceedings in Spain) in January from which the details of this case can be ascertained. At that time, a bankruptcy petition was adjourned when the High Court found that the petitioning creditor had an ulterior motive in seeking the bankruptcy order and the liquidation plan in the proceedings in Spain appeared to produce the best opportunity to all creditors and not just the petitioning creditor.
Following that adjournment, a bankruptcy order was in fact made against Maud by a Registrar in April 2016. The court at that time held that there was insufficient evidence to sustain an argument that the petitioning creditor had an ulterior motive and was not acting in the interests of the creditors as a whole. He also found that there had been insufficient progress in the Spanish insolvency proceedings to suggest that a sale of a valuable asset would be concluded within a reasonable time and the creditors paid. The court declined to exercise its discretion to grant another adjournment and also refused to grant Maud permission to appeal.
Maud applied to stay the bankruptcy order pending the hearing of his permission to appeal application and any subsequent appeal. He argued that he would suffer irreparable prejudice if made bankrupt as certain pre-emption provisions leading to the petitioning creditor gaining control of his company and its valuable asset would kick in to the detriment of other creditors. He argued that a short stay would not cause the petitioning creditor any prejudice where the petition was already outstanding for a year.
The High Court held that the usual position where there is an appeal against a bankruptcy order is not to order a stay because of the need to secure the assets of the estate, identify creditors and obtain information. If, however, there appears to be substantial grounds for an appeal and where the bankruptcy order would cause irreparable prejudice to the debtor, there might be reason to grant a stay.
The court considered Maud had reasonable prospects of success on his appeal on the ulterior motive point and that the assets and creditors had already been identified. It considered there would be irreparable prejudice to Maud and his creditors if a stay was not granted with no prejudice or risk of injustice to the petitioning creditor if the stay was granted. The balance was in favour of a stay pending the hearing of the application for permission to appeal.
Things to consider
Each application for stay pending an appeal is based on its own particular facts. The starting point on such applications is that a stay is the exception rather than the rule, but the court will undertake a balancing exercise, weighing the risks of injustice to each side if a stay is, or is not, granted.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
