Building Evidence Earlier in Bankruptcy Leads to Cost and Time Savings for Petitioners
Issuing Bankruptcy proceedings can sometimes be a game of cat and mouse.
Keeping intense pressure on the debtor is vital if you are to achieve success quickly. Unfortunately the process of serving bankruptcy petitions can allow the debtor the opportunity to delay the inevitable, whilst they take advice and attempt to dispose of their assets. Mark Hodgson, Managing Director of TREMARK Associates Limited believes more petitioning solicitors should be looking for more from their process server to achieve swifter success.
“Too many accept the delays and only want further investigation carrying out when they find it cannot be served personally and therefore then have to undertake a trace or further investigation to comply with an order for substituted service. Unfortunately some process servers are also at fault in having no consideration of the bankruptcy process, they believe that their job is merely to attempt to serve the papers” says Mark.
The Insolvency (Amendment) Rules 2010 came in to force just over 14 months ago with a number of changes relevant to the personal service of Bankruptcy Petitions (6.14) The new rules imply that solicitors acting on behalf of the creditor should apply to the court for ‘An order for substituted Service’ following a process servers abortive attempts to personally serve a bankruptcy petition. The practice directions (11.4) advise that one visit should be made to each known address before a letter of appointment is posted to the debtor by first class post. Should the debtor fail to make the appointment or any other arranged in lieu of then an application for substituted service must be made to the court. The petition should then be personally served in the manner that the court directs along with the adjourned hearing date and a copy of the ‘Order for substituted service’.
In effect these directions can actually make it easier for any debtor to evade service and buy him or her a further 8-12 weeks grace whilst also incurring the petitioner with further legal costs in respect of the secondary service of the documents and attendance at the second hearing.
However, Mark Hodgson states “Over the past 14 months TREMARK Associates have been trialling a slightly alternative process to assist our solicitor clients avoid the need of having to apply for such orders and hence having to re –instruct a process server and the inconvenient and perhaps costly delay and need for attendance at a second hearing.”
Tremark have looked at the whole process of the action and asked - what does the client actually want? Naturally they want the Petition serving in accordance with the rules, but what is the end game and can we help in reaching that point as quickly as possible and also save their client some money along the way.
With more time and care taken at the start and before making the application for substituted service we have achieved great success. For example, where meeting the debtor seems difficult it’s imperative to undertake various enquiries to either confirm residency or to trace a new residential and /or work address and attempt to meet the debtor. Speaking to their solicitor can help, for whilst they cannot accept service of a petition (unlike a statutory demand) they may be able to arrange an appointment for you.
If the subject appears to be acting evasively but enquiries lead us to believe that mail left at various locations will come to their attention we leave a letter of appointment at each address in addition to sending one by first class post. In order to contact the debtor we have also sent text messages, emails and private messages through Facebook. In most cases we have found that the subject will actually contact us, perhaps out of curiosity, to arrange an alternative meeting time or place.
If the subject does not keep an appointment further enquiries are made to gain some evidence that the subject has received the previous letter (or messages) and has been seen at the suspected address since. This can include speaking to neighbours, colleagues, family members or even very discreet enquiries with the local shopkeeper. Has the car moved? Have curtains been opened or windows shut? Has post previously seen left on the doormat been removed? Has the milk now disappeared from the doorstep? These and more are all tell tale signs that the subject may be in and around.
Where such evidence can be found copies of the Bankruptcy Petition are left at each of the various addresses and also sent to any confirmed address by both first class and recorded delivery post.
A witness statement is then prepared by the investigating process server providing full details of his or her efforts and their investigations before stating that it is their belief that the letters of the appointment and the Bankruptcy Petition has now come to the attention of the subject whom they believe was avoiding service. Finally they request ‘that the court make an order that service has been effected or be served in any manner that the court direct.’
We also think it is important that the investigating process server give the court some information on his or her investigation experience i.e. ‘I have been a professional Investigator for 15 years and am a member of the Association of British Investigators’, this provides the judge with reassurance that the evidence is reliable. The evidence needs to convince the court all avenues to effect personal service have been exhausted and why it is believed that the debtor was evading service and how it is believed that the Bankruptcy Petition left will come to the attention of the debtor within a matter of days. The key is to leave the judge of the opinion that there is absolutely nothing further that the process server can do. We have found that in most cases, providing that this evidence is detailed enough, the court will make a substituted service order - retrospectively. On the few occasions where the court have been minded not to make a retrospective order, it is unusual for the court to require that a further personal visit be made and rather more likely that a further copy the Bankruptcy Petition be posted by first class along with the new hearing date and a copy of the ‘Order for substituted service’ to the debtor. This obviously negates the need for a process server to personally visit the address again and therefore keeps process serving costs down. Importantly going the extra mile earlier by leaving messages and eventually leaving copies of the Bankruptcy Petition at the debtor’s last known addresses prior to making an application for substituted service allows the debtor the opportunity to contact the petitioner upon receipt of the document and thus acknowledge service.
“We have seen a significant rise in the number of debtors who have not actually been personally served making contact in an attempt to resolve the matter” says Mark.“ This in itself enables the petitioner to confirm to the court that the debtor has responded to service of the petition and prevents the need for an adjournment. We have also seen an increase of those not in effect served and who don’t respond, actually turning up the hearing which proves that leaving and sending a copy of the petition actually works.”
Author: Mark Hodgson ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ), tel 0845 862 8666
Mark was named ‘Investigator of the Year’ by the ‘National Association of Investigators and Process Servers’ in 2010. TREMARK Associates (www.tremark.co.uk) were also awarded ‘Best Debt Collection Company’ at the 2010 Saint Nicks Insolvency Awards. Mark Hodgson also sits on the Governing Council of the ‘Association of British Investigators and is a member of the ‘Institute of Credit Management’ and ‘The Institute of Paralegals’. He is also an associate member of R3, The Association of Business Recovery Professionals. Tremark Associates are also members of the Credit Services Association.
