Fifteen years after discharge from bankruptcy, Hamilton accountant Phil Young asked the High Court to annul his earlier bankruptcy giving him a clean slate as if he had never been bankrupt. Annulment was refused; his personal creditors had received no payment at all.
Mr Young was bankrupted in 2003 after his finance company Baywater Finance Ltd went into receivership following allegations that the company was being mis-managed and that breaches of the Securities Act were putting company depositors at risk. The receiver’s final report five years later stated depositors got back 84 cents in the dollar. Mr Young held partly paid shares in Baywater. As part of the receivership, Mr Young was sued on this uncalled share capital; held liable to pay $350,000. He was bankrupted for non-payment. He was subsequently prosecuted for breaches of the Securities Act and ordered to pay reparations totalling some $123,000. Breaches of the Securities Act centred on soliciting funds from the public after an earlier Securities Act prospectus had expired.
In 2022, he took legal action against Insolvency Service seeking to have this earlier bankruptcy annulled. The effect of annulment is to declare there was never any prior bankruptcy. For professional purposes, Mr Young would no longer have to disclose his earlier bankruptcy.
Mr Young said all debts ‘were satisfied.’ Payment of court-ordered reparations meant all Baywater depositors had been repaid in full, he said. The court was told Insolvency Service collected no money from Mr Young’s bankruptcy and his personal creditors received nothing at all in repayment of their debts. While Baywater debts owed depositors may have been paid, all his personal bankruptcy debts remained unpaid.
Associate judge Andrew refused annulment. There were no grounds for annulment, he said. And even if there were, waiting fifteen years is too long.
The court was told Mr Young operates an accounting services business from his home in Crosby Road, Hamilton.
Young v. Official Assignee – High Court (14.07.22)
22.125