Refusal of debt relief due to late submission of application for debt relief

Date 1 mar. 2012
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On 11 November 2011, the Western High Court upheld the ruling from the bankruptcy court in Holstebro after which it denied a debtor debt relief, as the application was not filed in time.


The case in brief

The debtor was declared bankrupt, and his bankruptcy was finalized in early February 2010. The debtor filed his application for debt relief on 14 February 2011. The debtor argued that having contacted the curator and SKAT at an earlier stage in order to introduce debt relief was sufficient in order for the debt relief application to be considered to have been filed in time. As a consequence, the debtor was of the opinion that the application should be treated under the Bankruptcy Act, chapter 29. In accordance to this chapter, a debtor can obtain debt relief if the debtor can establish that the liability cannot, and within the forthcoming years has no, prospect of meeting its debt obligations and that it is assumed that debt relief will lead to a lasting improvement of the debtor’s financial conditions. 


The legal basis

The rules of the Bankruptcy Act, chapter 29, on debt relief will normally only apply in an event where a debtor submits a request for debt relief before the bankruptcy court is convened for the closing creditor’s meeting, cf. Section 231, 1.


In accordance with Section 231, 4, the rules may be applied despite the fact that the debtor filed for debt relief at a later time than stated above. The provision does not include a time limit in relation thereto. The preparatory work of the provision presumes that a request for debt relief under the Bankruptcy Act’s chapter 29 should not be granted in the event that some time has passed from the time when the bankruptcy is completed. A specific timeframe is not considered within the preparatory work.


The decision of the Western High Court

The bankruptcy court refused that the debt relief should be subject to the Bankruptcy Law, Chapter 29, based on its conclusion that the debtor’s application was filed too late and consequently, the request for debt relief was not granted. Furthermore, the bankruptcy court stated that it was the debtor’s own responsibility to apply for debt relief in due time. The debtor’s attempt to contact the curator and SKAT could not justify the belated application for debt relief.


The debtor appealed the ruling to the Western High Court which came to the same decision as the bankruptcy court and with the same reasoning.


Consequences of the decision

The ruling has established an outer limit on the time period within the Bankruptcy Act’s Section 231, 4, although without specifying the deadline further. The ruling may be used as aid to construction of the Bankruptcy Act Section 231, 4.



If you have any questions or require additional information on the above, please contact Partner Thomas Weitemeyer (twe@mwblaw.dk) or Junior Associate Kim David Lexner (kdl@mwblaw.dk).

 

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