Finances & Bankruptcy

Family Law

In the case of Merkarska v Ruiz the husband petitioned for bankruptcy in 2007 during the course of divorce proceedings without the wife being notified.  In 2008 the wife became aware of the bankruptcy.

In the financial settlement made in 2008 the wife was to receive about 60% of the assets with the trustee of the bankruptcy receiving the rest.

After the final hearing in 2009 the wife made an application to appeal out of time to have the bankruptcy annulled.  The delay in requesting this was said to be due to the fact that she could not afford the costs.

The Appeal in May 2011 heard arguments for the annulment and whether the judge’s order in 2008 should be allowed.  Both were dismissed.  The Judge was satisfied that the husband had not filed for bankruptcy to purposely disrupt the wife’s claim.

Mr Justice Peter Jackson ruled that an application to annul the bankruptcy might have been successful if it had been made earlier.  It was now too late and even if it was annulled there was no proper basis for the trustee’s fees to be disallowed.  It was also ruled that the order made in the divorce proceedings was to stand.  There was no error in the district judge’s decision at the time and subsequent events did not provide sufficient grounds for interfering with that ruling.

This case shows that if a person feels a bankruptcy order should not have been made they must act quickly as the costs of the bankruptcy will quickly begin to diminish the value of the assets.