Annulling a debtor-initiated bankruptcy: lessons from Nilsson v Jones [2026] EWHC 319 (Ch)

In Ann Nilsson & Anor v Timothy Edward Jones [2026] EWHC 319 (Ch), ICC Judge Jones (sitting in retirement) addressed two significant questions arising from a bankruptcy order made by an Adjudicator in December 2021: whether the order should be annulled on grounds of domicile, and whether the Court retained a discretionary power to annul orders made under the administrative adjudicator regime. The judgement, handed down on 17 February 2026, has implications for cross-border insolvency and the scope of the Court's powers under section 282 of the Insolvency Act 1986.

Domicile: flux as a bar to change

The trustees argued that the respondent had acquired a domicile of choice in Austria by the date of the bankruptcy order. Although he had lived there since 2012, ran businesses from Tux, and made repeated representations to various courts — including a statement that he intended to move to Austria permanently and apply for citizenship — the Court rejected the trustees' case.

The critical obstacle was the state of flux arising from protracted divorce and custody proceedings. Despite strong cumulative evidence of residence and stated intention, no direct evidence established an intention to remain in Austria indefinitely in the legal sense. The Court drew a careful distinction between permanent residence and the stricter domicile test, applying the principles set out in Henwood v Barlow Clowes International Ltd [2008] EWCA Civ 577 and the commentary in Dicey, Morris & Collins. Where a clear contingency — here, the outcome of custody and financial remedy proceedings — remained unresolved, the necessary animus manendi could not be inferred. The domicile of origin was not displaced.

Discretion to annul: the adjudicator point

The respondent contended that no discretionary power to annul existed in relation to orders made by an Adjudicator, arguing that the administrative scheme operated on a purely mechanical basis and that the grounds available under section 282(1)(a) were confined accordingly. The Court rejected this. Parliament had not amended section 282 when introducing the adjudicator regime, and its broad, unfettered language — that an order "ought not to have been made" — remained intact. To hold otherwise would have stripped creditors of the ability to challenge debtor-initiated bankruptcies on discretionary grounds, undermining principles of international comity and the settled practice affirmed in JSC Bank of Moscow v Kekhman [2015] EWHC 396 (Ch).

Exercise of the discretion

Applying the principles from Kekhman, the Court held that the order ought not to have been made. The respondent's centre of main interests and the overwhelming majority of his assets were in Austria, which does not recognise bankruptcy orders founded on domicile rather than COMI. There was no evidence at the date of the order that the Austrian estate would be delivered up or otherwise made available for distribution. Creditors within England and Wales faced the prospect of being restrained by section 285 whilst European creditors remained free to enforce independently — precisely the inequality of treatment the discretion exists to prevent.

Turning to whether the discretion to annul should nonetheless be withheld, the Court found no reason to do so. No creditor objected; the bankruptcy had realised nothing; and neither the respondent nor the trustees proposed any realistic mechanism for recovering the Austrian estate. The application succeeded.

Nilsson v Jones reinforces that the Court's supervisory jurisdiction over bankruptcy is not diminished by the adjudicator regime, and that the absence of a viable recovery plan for foreign assets will weigh heavily against making — and in favour of annulling — an order where creditors face structural disadvantage.

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