Non-provable debts - Advice for Insolvency Practitioners

In Malcom Niekirk’s latest Coffee Break Briefing, he provides some advice on Non-provable debts.

In this session, Malcolm outlined what a non-provable debt is, when it’s clearly non-provable, when it’s not clear and some examples.

You can find a short summary below or watch the video back in full.

Brief Summary

Not all debts can be claimed in a bankruptcy. Those that can’t are called non-provable debts and they sit outside the bankruptcy process.

They’re not included in the pool of liabilities considered during bankruptcy, which means they are not wiped out. Including fines and penalties, family court orders, student loans and post-insolvency debts (where the obligation only arose after the bankruptcy).

Key points

• Some debts are non-provable.
  • (And, in bankruptcies, some debts are not bankruptcy debts; those too are not provable).
• Most debts are provable debts, because those are widely defined
• There are some statutory exclusions (debts that are not provable) in r14.2.
• Creditors may still be able to take action to enforce payment of non-provable debts, despite the insolvency.
• Post appointment debts, in particular, can be hard to categorise.  They may be:
  • Provable, or
  • Non-provable, or
  • Payable as an expense.
• Post appointment rent (for example) will be either:
  • Provable, or
  • Payable as an expense.
• The category (for post-appointment rent) will depend on:
  • The type of insolvency appointment; and
  • How the premises have been used post-appointment.
• Secured creditors’ claims are non-provable.  (But, if the value of their security is less than their debt they can prove for the shortfall.)
• An insolvency practitioner can test the value a secured creditor puts on their security.
• Insolvency practitioners can protect themselves – in the contracts they make – by designating adverse claims as non-provable.

Upcoming events

Thanks for reading this short summary. You can watch the full, detailed webinar here.

My next Coffee Break Briefing will be on 'Provisional liquidations' on Monday 12^th May. For event invites and updates straight to your inbox, please subscribe to our email list here.

And, we now have a date for our big annual Insolvency Conference – Friday 13^th June. It’s taking place at the lovely Beaulieu Inn in the New Forest, and I do hope you can join me. We’ll be sending the invite out to the list shortly.

Specialist Insolvency Solicitors

If you have any questions after reading this article, please don’t hesitate to get in touch with our bright and experienced team.

Call us on 01202 499255, or fill out the form at the top of this page, for a free initial chat.