When someone is made bankrupt, their interest in the family home vests automatically in their Trustee in Bankruptcy, upon his or her appointment. The Trustee has 3 years from the date of the bankruptcy order to realise this interest. The Trustee will first of all ask if a third party is willing and able to purchase the Trustee’s share, usually 50% of the available equity. If that is not possible, then the Trustee will request that the property is put on the market for sale. As a last resort, the Trustee can apply to the Court for an order for possession and sale of the property.

There are certain rules and regulations surrounding company liquidation, many of which focus on your actions as a director. Once a company becomes insolvent, you must put creditor interests first by ceasing to trade and safeguarding its assets, with little or no consideration for shareholders, members or directors.

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What does this letter say?

“I have today seen and distrained on the goods listed in the inventory below. I did this at xxx

Accountant in Bankruptcy (Scotland)
The Official appointed to monitor personal insolvency procedures. She will also act as trustee where no insolvency practitioner is nominated on a sequestration petition.

If your company is approaching insolvency, you may be wondering if voluntary liquidation is a possibility. Perhaps if you do not act quickly a secured or unsecured creditor could take the future of the company out of your control, at the same time exposing you and other directors to accusations of wrongful trading?

A Company Voluntary Arrangement (CVA) provides a way for companies in distress to pay off their debts over a fixed period of time, and offers the opportunity to address issues surrounding management and operational systems that were not working.

Pressure from suppliers can be overwhelming when your company is experiencing financial difficulties. Even if it is only a temporary downturn in company fortunes, the fact that a supplier can apply for a winding up order leaves you exposed to compulsory liquidation and closure.

If suppliers have tried unsuccessfully to recover their monies, and your company has failed to respond or been unable to pay, their decision to take legal action could be disastrous.

The case of Burnden Holdings (UK) Limited (in liquidation) v (1) Gary John Fielding (2) Sally Anne Fielding [2016] determined whether a claim in respect of breach of duty against two directors of Burnden Holdings (UK) Limited (Burnden) was time-barred. The alleged breach of duty was in connection with a distribution in specie. The Court of Appeal overturned the High Court’s decision and held that section 21 of the Limitation Act 1980 (LA 1980) applied so that the claim was not subject to the usual period of limitation.

Under the insolvency legislation, any dispositions of property or payments made by a company after it has been presented with a winding up petition are void, unless validated by the Court.

In Evans v Jones the directors of a liquidated company sought to defend a claim brought by the liquidators that loan repayments were insolvent transactions by asserting that the company was balance-sheet solvent at the time of the transactions.  The directors based this claim on the company having contingent assets in the form of dividend payments (to the directors) that were later found to be unlawful.