Debt problems? Take advice before acting
Posted: 27th July 2016
If you are facing debt problems, it is always wise to seek specialist advice as quickly as possible. One High Court case strikingly showed that belated attempts to disperse your assets amongst your loved ones will rarely defeat creditors and can instead place those you care about in legal jeopardy.
Shortly before he was made bankrupt, owing some £8.9 million, a businessman had purported to assign his beneficial interest in a long leasehold residential property to his mother. Although the property was subject to a mortgage, it was estimated to be worth £7.5 million and his mother was said to have paid £25,000 in respect of the assignment.
After the man’s trustee in bankruptcy launched proceedings in order to protect the interests of his creditors, a judge found that the deed of assignment was a sham and that his mother had not in fact paid the £25,000. Even had that not been the case, the judge noted that he would have set aside the deed as a transaction that had been entered into at an undervalue within the meaning of the Insolvency Act 1986.
In directing that the man’s interest in the property should be vested in the trustee, the judge also rejected arguments that he had a right to continue in occupation of the property under a lease granted to him by his mother. On that basis, a possession order was made and subsequently executed.
The facts of the case emerged as the High Court rejected the man's and his mother's appeal against the judge’s decision after finding that their arguments had no real prospect of success. The case had involved a number of lengthy hearings and both mother and son were left facing very substantial legal costs bills.