Individuals and directors of companies often attempt to transfer valuable assets to associates for less than their realisable value to avoid the liquidator. This is despite there being strong sanctions against such activity.
Taking the situation of a bankruptcy, a licensed insolvency practitioner appointed as Trustee in Bankruptcy will, as a matter of course, undertake a detailed review of transactions carried out by the individual before he or she was made bankrupt to identify just this sort of transfer.
A liquidator will do much the same and both Trustees in Bankruptcy and Liquidators have wide ranging powers to require various parties to provide detailed information on the bankrupt or the company’s dealings, including original documents. This power includes solicitors and bankers.
Recent case law has confirmed that the courts will not be reluctant to support a valid claim made by the officer holder and will order the loss to the estate to be made good.
A recent bankruptcy case, Ahmed v. Ingram , laid out the basis on which the loss is to be made good and, amongst other things, confirms that the office holder will be motivated to act quickly, and may take expert advice to establish the loss to the estate. The case is a sober reminder of the extensive powers that the insolvency legislation provides to the office holder and of the willingness of the office holder to act to protect the interests of the creditors.