Once the Court has made a bankruptcy order, the Trustee in Bankruptcy will investigate various matters relating to the bankrupts financial affairs, including, whether the bankrupt has disposed of any assets. If there have been disposals within the specified time period (up to 5 years before the bankruptcy), the Trustee will seek to establish that the disposals are for a proper value and if not, may seek to recover the property involved or the value of the loss or underpayment. The Trustee may also bring other proceeding against the bankrupt (see bankruptcy offences / bankruptcy restriction orders).
s339 Insolvency Act 1986 states as follows:-
(1) Subject as follows in this section and section 341 and 342, where an individual is adjudged bankrupt and he has at a relevant time entered into a transaction with any person at an undervalue, the trustee of the bankrupt’s estate may apply to the Court under this section.
(2) The Court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction.
(3) For the purposes of this section and sections 341 and 342, an individual enters into a transaction with a person at an undervalue if:-
(a)he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration,
(b)he enters into a transaction with that person in consideration of marriage (or formation of a civil partnership) or
(c)he enters in to a transaction with that person for a consideration the value of which in money or money’s worth, is significantly less than the value, in money or money’s worth, of the consideration provided by the individual.
However, simply because a Trustee alleges that there has been a transaction at an undervalue, does not mean that there has actually been such a transaction or alternatively, if there has been a transaction at an undervalue, that the loss or undervalue is in the sum alleged.
FDL Solicitors has extensive experience in opposing claims based on allegations of transactions at an undervalue.
An initial no obligation telephone discussion is free, so why not call or email David Cousen.
T: +44 (0)161 833 0578
E: david.cousen@fdl-law.co.uk
