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Bankruptcy is one way of dealing with an individual's debts that cannot be paid.
Anyone can be made bankrupt, including individual members of a partnership. There are different insolvency procedures for dealing with companies and for partnerships themselves.
Bankruptcy can only apply to individuals (including sole traders and individual members of a partnership). Bankruptcy petitions may be presented to the court by the individual, by creditors who are owed £750 or more, or by the supervisor of an individual voluntary arrangement (if the individual has not complied with the terms of the arrangement). A bankruptcy order is made by the court.
The Official Receiver normally acts as receiver and manager of the bankrupt's estate and will become trustee unless an Insolvency Practitioner is appointed. The trustee realises any assets (except for certain assets, including basic domestic items needed by the bankrupt and his or her family, and items such as vehicles, equipment, tools and books needed for the bankrupt's job). After paying fees and the costs of the proceedings, the trustee distributes the remaining money to the creditors in a strict order of priority.
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