Court clarifies key component of bankruptcy law


Insolvency and Companies Court Judge Mullen has handed down his judgment in the case of Dusoruth v Orca Finance UK Limited (in liquidation) [2022] EWHC 2346 (Ch). The judgment is notable for a number of reasons, particularly in relation to the court's finding as to what constitutes a 'liquidated sum' for the purposes of a bankruptcy petition.


The case centred around Mr Ramesh Dusoruth's application for an annulment of the bankruptcy order that was made against him on 16 November 2020, on the basis of a petition presented by Orca Finance UK Limited (in liquidation) ("Orca"). Orca was owned by a company registered in Malta, which was in turn owned by Mr Dusoruth, and Mr Dusoruth was Orca's sole director at the date of its liquidation.

It appeared to Orca's liquidators that Mr Dusoruth had misapplied company monies, namely that he had utilised Orca's funds as if they were his own in respect of personal credit card bills and rental payments. The evidence for this was powerful: Orca had paid American Express credit card bills in the total sum of €361,899.73, which were addressed to Mr Dusoruth, and which catalogued spending at restaurants, hotels and various retailers, including €32,000 spent at Hermès (referred to in court as the "the American Express Debt"). Orca had also paid a total of £276,838.01 in rent on a flat in Curzon Street, which was used by Mr Dusoruth and his family (the "Curzon Street Debt"). 

It was on the American Express Debt and the Curzon Street Debt that the bankruptcy petition was based. Orca's liquidators' position was that, in circumstances where the claim was for restitution for the unjust enrichment of Mr Dusoruth, nothing further was required to quantify the claim.

Mr Dusoruth's application was made pursuant to section 282(1)(a) of the Insolvency Act 1986 (the "Act"), which provides that the court "may annul a bankruptcy order if it at any time appears to the court that, on any grounds existing at the time the order was made, the order ought not to have been made". Mr Dusoruth advanced several arguments in support of his application, including that neither the American Express Debt nor the Curzon Street Debt were for liquidated sums, rendering the bankruptcy petition "irredeemably defective".

A liquidated sum

Section 267 of Act sets out which debts can be used as the basis for a bankruptcy petition. In essence, the debt must be undisputed and for a liquidated sum of more than £5,000.

While there is no statutory definition of what constitutes a liquidated sum, common law dictates that to be liquidated, the sum of money must be "pre-ascertained"[1] or "a specific amount which has been fully and finally ascertained"[2]. 

Interestingly, the judge said that it did not matter whether a petitioner was able to ascribe a figure to the claim, even if the petitioner could calculate it "down to the last penny". ICC Judge Mullen elucidated the point at paragraph 123 of his judgment as follows:

It must be liquidated either because the quantification of the debt is one from which the debtor is not permitted to resile as a matter of admission, acknowledgment or agreement, or because it has been determined as a matter of the court process.

Applying this logic to the American Express Debt and the Curzon Street Debt, the judge went on to determine that until there was a determination as to:

  • whether Mr Dusoruth had been unjustly enriched; and
  • if he had been unjustly enriched, to what extent; and
  • what remedy was appropriate,

Mr Dusoruth's liability was not pre-ascertained, and thus the claim could not be for a liquidated sum within the meaning of the Act.


Unfortunately for Mr Dusoruth, the judge still declined to annul the bankruptcy order against him. ICC Judge Mullen was satisfied that Mr Dusoruth was insolvent when the petition was presented, and continued to be so despite the American Express Debt and the Curzon Street Debt not providing the proper bases for a bankruptcy petition. This was most notably because  HMRC had, separately, proved in the bankruptcy for the sum of £4.7m. The judge was also made aware of Mr Dusoruth's lack of cooperation with the trustee in bankruptcy, which was another factor which weighed against annulling the order.

In his concluding remarks, the judge commented that Mr Dusoruth was "subject to substantial, and indisputable, liabilities and claims" and that if the bankruptcy order was annulled, the other creditors would have to seek a bankruptcy order themselves.


This case is clearly very useful in clarifying the concept of a liquidated sum as the basis of bankruptcy petitions. Petitioners should think carefully before presenting petitions that are not based on the most straightforward of debts, and be mindful of the necessary element of finality as well as certainty. It is not enough to simply put a figure on a claim.

The case also serves as a reminder of the court's wide discretion in such matters. The bankruptcy order was effectively upheld despite the court's finding that it was not based on a liquidated sum. As the judge noted, bankruptcy is a class remedy, and it may be inferred from the decision that the court will seek to reach the 'right' conclusion, that being one which protects all creditors. 

The far-ranging scope of section 282(1)(a) of the Act confers extensive discretion on the court, which may annul at any time, if it appears on any grounds existing at the time of the order that the order ought not to have been made. Arguably such wide discretion is necessary, as it empowers the court to curb potential abuse of annulment proceedings, whilst retaining the ability to balance the respective rights and interests of debtors and creditors.


[1] McGuinness v Norwich and Peterborough Building Society [2011] EWCA Civ 1286 (paragraph 6)

[2] Sandelson v Mulville [2019] EWHC 1620 (Ch) (paragraph 5)


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