The High Court has scrutinised the validity of a Declaration of Trust and the enforcement of charging orders. Wade v Singh sheds light on the intricate balance between property rights, trust law, and creditor protection in an insolvency. The case, centered around a property known as "the Oaks," involved the liquidators of MSD Cash & Carry Plc (in liquidation) seeking to enforce charging orders against properties owned by various family members involved in the business to satisfy a significant judgment debt.

Background of the Case

The High Court has confirmed in the recent case of Hyde and another v Djurberg and others ([2024] EWHC 1188 (Ch)) that it won't tolerate the concealment of after-acquired property from trustees in bankruptcy, even when the property is the subject of a settlement agreement and paid onto various third parties. The judgment highlights the importance of monitoring a bankrupt's affairs as a trustee, acting quickly to preserve assets and serving a notice pursuant to section 307 of the Insolvency Act 1986 (Act) if there's a potential claim for after-acquired property.

When finances become distressed, creditors examine all avenues to recover their debt which can result in any intercreditor agreements being thrown into the spotlight. The recent judgment of Re Arboretum Devon is another helpful reminder to lenders entering into an intercreditor agreement (ICA) that these should be drafted with the worst-case scenario in mind and using the clearest language in order to avoid disputes arising at the time of enforcement.

The U.S. District Court for the Southern District of New York, on April 27, 2014, issued a decision directing the bankruptcy court to dismiss fraudulent transfer complaints brought by the Madoff Securities Investor Protection Act of 1970 (“SIPA”) trustee against investment funds, their customers and individuals when the trustee failed “plausibly [to] allege that defendant[s] did not act in good faith.” SIPC v. Bernard L. Madoff Inv. Sec. LLC, 2014 WL 1651952, at *5 (S.D.N.Y. April 27, 2014).

In a recent decision, the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) granted protection over the U.S. assets of a Cayman Islands exempted company in liquidation. See Revised Order Recognizing Foreign Proceeding (the “Order”), In re Saad Investments Finance Company (No.5) Limited (“SIFCO5”), Case No. 09-13985 (KG) (Bankr. D. Del. Dec. 17, 2009) (Docket No. 47). The company, SIFCO5, is subject to official liquidation proceedings in the Cayman Islands, which the Bankruptcy Court found was eligible for relief under chapter 15 of the U.S.