Extortionate credit transactions
316.—(1) This Article applies where a person is adjudged bankrupt who is or has been a party to a transaction for, or involving, the provision to him of credit.
(2) The High Court may, on the application of the trustee of the bankrupt’s estate, make an order with respect to the transaction if the transaction is or was extortionate and was not entered into more than the 3 years immediately preceding the commencement of the bankruptcy.
(3) For the purposes of this Article a transaction is extortionate if, having regard to the risk accepted by the person providing the credit—
(a)the terms of it are or were such as to require grossly exorbitant payments to be made (whether unconditionally or in certain contingencies) in respect of the provision of the credit, or
(b)it otherwise grossly contravened ordinary principles of fair dealing;
and it shall be presumed, unless the contrary is proved, that a transaction with respect to which an application is made under this Article is or, as the case may be, was extortionate.
(4) An order under this Article with respect to any transaction may contain such one or more of the following as the High Court thinks fit, that is to say—
(a)provision setting aside the whole or part of any obligation created by the transaction;
(b)provision otherwise varying the terms of the transaction or varying the terms on which any security for the purposes of the transaction is held;
(c)provision requiring any person who is or was party to the transaction to pay to the trustee any sums paid to that person, by virtue of the transaction, by the bankrupt;
(d)provision requiring any person to surrender to the trustee any property held by him as security for the purposes of the transaction;
(e)provision directing accounts to be taken between any persons.
(5) Any sums or property required to be paid or surrendered to the trustee in accordance with an order under this Article shall be comprised in the bankrupt’s estate.
(6) Neither the trustee of a bankrupt’s estate nor an undischarged bankrupt is entitled to make an application under section 139(1)(a) of the Consumer Credit Act 1974(1) (re-opening of extortionate credit agreements) for any agreement by which credit is or has been provided to the bankrupt to be re-opened.
(7) The powers conferred by this Article are exercisable in relation to any transaction concurrently with any powers exercisable under this Order in relation to that transaction as a transaction at an undervalue.