Bankruptcy represents a significant interference with the bankrupt's property and business activities. Those consequences form the judicial policy at work in Re Bartercard Exchange Ltd  NZHC 703, in which the Court refused to cure deficiencies in Bartercard's bankruptcy notice, and dismissed its application to adjudicate Mr de Vires bankrupt.
The bankruptcy notice at issue had the effect of overstating the amount of a judgment debt due from Mr de Vires to Bartercard by approximately $18,750, because it did not make allowance for certain amounts that Mr de Vires had repaid Bartercard.
The Judge held:
- While section 30 of the Insolvency Act 2007 (Act) ordinarily protects bankruptcy notices that overstate the amount owing from invalidation, that section did not assist Bartercard because Mr de Vires had raised the issue of the overstatement of the amount owing within the required time
- Section 418 of the Act could not be used to cure the defect because Bartercard had not placed sufficient evidence before the Court to enable the Court to safely conclude that the overstatement in the bankruptcy notice was within the boundaries of what could fairly be regarded as a "defect".
The result was that the bankruptcy notice was invalid, such that there was no act of bankruptcy upon which Bartercard could rely.
The decision illustrates that the Act's requirements must be strictly adhered to, for reasons including that a debtor is entitled to accurate and clear information when faced with the serious consequences of bankruptcy.
See Court decision here.