Creditor-Initiated Personal Bankruptcy

Purpose of this Guide: Use this plan when a client is owed an undisputed debt of $1,000 or more and wishes to initiate bankruptcy proceedings against an individual debtor. It guides the practitioner through the process of obtaining a bankruptcy notice, serving it, and applying for adjudication. This process acts as a collective execution procedure of last resort.

Jurisdiction: New Zealand High Court.

The Process at a Glance: The process begins with securing a sealed judgment and issuing a Form B2 Bankruptcy Notice. This notice must be personally served on the debtor, triggering a 10-working-day compliance window. If the debtor fails to comply, they commit an act of bankruptcy. The creditor then files an application for adjudication, which must be served and followed by a hearing where the High Court exercises its discretion to order bankruptcy. Finally, a proof of debt is lodged with the Official Assignee.

Key Legislation and Case Law: Insolvency Act 2006, Insolvency (Personal Insolvency) Regulations 2007, and Part 24 of the High Court Rules 2016. Ensure compliance with Section 13 (threshold criteria) and Section 17 (act of bankruptcy). Refer to Commissioner of Inland Revenue v Raynal [2023] NZHC 1664 regarding the need for the court's leave to serve a bankruptcy notice on a debtor outside New Zealand.