The High Court ruled that Zurich Bank may present a bankruptcy petition against Jim McConnon after rejecting his application to dismiss a bankruptcy summons over a debt of €32,266,470.
In a judgment delivered by Ms Justice Dunne, the court considered whether the creditor could still petition after the three-month period in the Bankruptcy Act had passed while McConnon’s dismissal application was before the court. It concluded that the period did not prevent the bank from presenting a petition once that application had been determined against him.
The bank had obtained judgment for the debt in March 2011. A bankruptcy summons was served on McConnon on 11 November 2011. He applied within the statutory 14-day period to have it dismissed, and the application was heard on 6 June 2012.
McConnon argued that his appeal against the underlying judgment meant the summons should be dismissed. The judge found that the appeal, without a stay on enforcement, did not by itself create an issue requiring separate trial. She was not satisfied that the matters he relied on showed a reasonable prospect of success in the appeal. The court also noted that his constitutional challenge to the Bankruptcy Act had already been dismissed.
The judge rejected his other objections. She found no requirement for a separate company officer’s statement authorising Richard Murray to swear the bank’s affidavit. She also held that the receiver appointed under a mortgage and charge before the judgment was not a form of execution that had to be disclosed in the affidavit seeking the summons.
The remaining question was whether the three-month limit for presenting a bankruptcy petition continued to run while the dismissal application was pending. The court said the Act was ambiguous when read as a whole and concluded that it would be illogical to let the pending application protect the debtor while leaving the creditor unable to pursue a petition if the summons survived challenge.
The court therefore held that an act of bankruptcy had been committed, assuming the summons was not dismissed, and that Zurich Bank was then in a position to present a petition on that basis. The order did not itself adjudicate McConnon bankrupt; it resolved the application to dismiss the summons and addressed the creditor’s ability to present a petition.