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I have a friend who is being made ill because of the scale of the costs in his bankruptcy proceedings. 

He had a judgement debt of £25,000 and this rose to £40,000 over time with interest.

He didn't have the cash to pay as his income is modest.

 

He was made bankrupt and an order for sale was made for his house. 

He has little understanding of the law and missed several court appointments leading to a sale hearing. 

The net result was that the house was sold by court order and £110,000 realised but all of the money went in costs and none was returned. 

 

 

He has a very small business with him and one part time employee on minimum wage clearing about £14,000 net each year. 

He has asked to be released from bankruptcy but it has been 5 years and the trustees claim there is now another £110,000 owing in costs.

They are high end Manchester solicitors. 

 

They have appointed an accountant at £250 an hour to be on his board. 

His business is one man and a dog, not Carillion.

It looks like he will never be released from bankruptcy and his health is deteriorating rapidly with the stress. 

 

Is there no rule for proportionality in costs in bankruptcy hearings? 

The accountant is asking for another £15k for costs this week before release will be considered.

More than his annual turnover. 

 

Are there any ways out of this for him? 

Quarter of a million  pounds for a £25k debt?

 

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Posted (edited)

is the business a limited company? If so it is nowt to do with his personal situation and the trustees cant insist on a bard member being appointed. If it was te co that went under with him acting as a guarantor then that is aother matter.

he really should consider winding the business up if the latter is the case, advice is being sought miles too late to be of any real help

Edited by ericsbrother

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He owns 100% shares in the business but it is a limited company.

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Posted (edited)

then nowt to do with the insolvency people. They cant appoint anyone, only he can so it looks like he agreed to this without asking anyone for advice

he should have taken professional advice before he was made bankrupt as what has been agreed now is done. he could wind the company up but that will cause as much grief as the current situation. Mind you, he could run up massive debts and the accountant will be equally liable as a director.

he couild try speaking to his local Chamber of Commerce

Drop me a message with the name of the company and I will see if there is anything adverse on Duedil etc

Edited by ericsbrother

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