Faced with bankruptcy proceedings brought by large financial institutions, individuals may be forgiven for feeling at something of a disadvantage. As one case showed, however, judges are not impressed by size and the balance of power in such cases is much more even that one might think.
A bank lodged a bankruptcy petition against a man on the basis that he had failed to satisfy a statutory demand for almost £1.2 million. The debt was said to have arisen from loan facilities advanced to him and from a personal guarantee and indemnity he had signed. However, he denied owing the bank a penny.
He asserted that payments under the loan facilities were extended not to him, but to his parents in respect of their business. He denied that he had any involvement or interest in that business. Challenging the validity of the guarantee and indemnity, he said that he had signed it at his father’s request and that he received no independent legal advice before doing so.
Dismissing the petition, the court found that the entirety of the debt was disputed on substantial grounds. A number of flaws in the bank’s case meant that it had failed to prove the debt in clear and unequivocal terms. Amongst other things, a facility letter that formed a central plank of the bank’s case was unsigned and therefore effectively worthless.