Insolvency & restructuring

Deciding the ownership of a bankrupt’s belongings

The case of Wood v Lowe and Others [2015] concerned a bankrupt’s fight to keep a valuable collection of his Beatles memorabilia out of his creditors’ hands. The Chancery Division ruled that the Beatles memorabilia, among other things, had not been gifted to the bankrupt’s wife and daughter but that it belonged to the bankrupt and therefore vested in his trustee in bankruptcy.

Be aware of void property transactions if seller is insolvent

There is always the risk with any property transaction that the seller could be selling at an under value because they are in financial difficulties and need a quick sale. If a pending winding up or bankruptcy petition is presented against the seller before the sale has completed, and which later results in a winding up or bankruptcy order, then the sale will be void – a fact the buyers are unlikely to know.

Retrieving goods from an insolvent distributor

The key to retrieving goods if a distributor has become insolvent is fast action. Give the Insolvency Practitioner evidence that you own the goods and ask for permission to enter the distributor's premises in order to identify and list all your goods stored there. If you cannot resolve matters quickly and the IP will not allow you to remove your goods, you will need to apply to the Court to obtain a court order so that you can either be compensated for your loss or to enable your claim to be treated as an expense of the administration and thus be paid.

What should a court order say where a statutory demand is set aside?

The case of Clarke v Cognita Schools Limited [2015] highlights the complicated relationship between the Civil Procedure Rules (CPR) and the Insolvency Rules. This particular case concerned a decision about whether or not a debtor, applying to have an application for a statutory demand dismissed, is entitled to receive a statement, in the Order that they have the right to have the order set aside, varied or stayed. In this particular case, the debtors were not correct to have applied the CPR when deciding their grounds for challenging the bankruptcy order made against them.
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