The High Court has put on hold a bankruptcy order obtained by a City firm against an individual who owed it around £167,000.
Speechly Bircham LLP, which became Charles Russell Speechlys following a 2014 merger, had secured the order against financial adviser Jonathan Digby-Rogers last September.
But the debtor successfully challenged the order after telling the court he stood to make enough money to pay his debts from his advice on a multi-million mining project in Mongolia. He contended that if he was made bankrupt then his credibility would be lost and he would lose his role in the deal, leaving no prospect of recovering any fees.
In Digby-Rogers v Speechly Bircham LLP the court heard that the firm was one of several creditors owed a collective £1.26m. The firm obtained judgment for £178,199 against Digby-Rogers in May 2015 and has since recovered some of that sum, but Speechly’s debt represented about 13% of the total.
Mark Anderson QC, sitting in the Business and Property Courts in Birmingham, said that Digby-Rogers had failed to exhibit any project documents or communications showing how much, or when, he would be paid.
But the 'unusual and surprising' aspect of this case, noted the judge, was that the bankruptcy petition was opposed not just by the debtor but by all eight other creditors. This group includes an individual, Paul Leatherdale, who is owed around £600,000, two firms of solicitors owed around £146,000 between them and an insolvency practice owed £21,000.
Digby-Rogers persuaded the County Court to adjourn the petition on five separate occasions. But when the case transferred to the High Court for a 1.5-hour hearing, the bankruptcy order was granted.
On appeal, Digby-Rogers challenged that ruling on six grounds, including that the High Court judge had proceeded on an error of law and had failed to take into account the interests of creditors.
The appeal judge said the High Court judge was entitled to make a finding that the prospect of Digby-Rogers being paid was not strong enough to warrant an adjournment.
But he said the judge was also required to consider and evaluate the views of other creditors aside from Speechly Bircham. He accepted creditors’ faith in the appellant recovering his fees did ‘appear surprising’, but he noted that a ‘proper exercise of discretion’ should allow their views to be heard. The appeal was allowed and the order cancelled in favour of another adjournment.