Chapter 23 & 24 - Bankrupts Estate

Question 1

Bankruptcy - what assets are excluded from the bankrupts estate?

Answer 1

• Tools/books/vehicles that are necessary for bankrupts employment
• Clothing/bedding/furniture for basic domestic needs
• Property held on trust for another person
• Rights under approved pension schemes
• Income for domestic needs
• Assets forfeited on making of the order

Question 2

Items of excess value S309 - Trustee must serve notice within what time period when they become aware of property?

Answer 2

S309 trustee must serve notice within 42 days from the date on which the property in question first came to his knowledge

Question 3

Items of excess value S309 - what is the effect of the Trustee serving notice?

Answer 3

• Property vests in trustee
• Trustee now has a duty to apply estate funds to purchase a reasonable replacement for property recovered under S309.

Question 4

Income payments order - what would the trustee see as excessive expenditure when looking at an IPO?

Answer 4

• Private health insurance
• Gambling
• Alcohol
• Tobacco
• Subscriptions to TV services
• Excessive mortgage payments
• Charitable donations
• Voluntary payments to pension schemes

Question 5

How much notice must a trustee give to a bankrupt for an Income Payment Order application?

Answer 5

Trustee must give 28 days notice to bankrupt, together with a copy of the application and a short statement for the grounds of the application.

Question 6

If a bankrupt has received notice of an Income Payment Order, what are his two options?

Answer 6

• Consent in writing to the application to court and trustee at lease FIVE business days before the hearing or
• Attend the hearing and show reason why the order should be other than that applied for

Question 7

If a trustee looks to apply for an Income Payment Order, how much should be left over for the bankrupt?

Answer 7

The order must leave the bankrupt with sufficient income for meeting the reasonable domestic needs of their family.

Question 8

Bankruptcy - what is the maximum duration for an Income Payments Order?

Answer 8

3 years from date of agreement

Question 9

Bankruptcy - what is an Income Payment Agreement?

Answer 9

A written agreement made between the bankrupt and his trustee by which the bankrupt voluntarily agrees to pay a specific sum to the estate for a specific time period.

Question 10

Bankruptcy - after acquired property - in what time period must the debtor advise the trustee of after acquired property?
When must trustee give notice to bankrupt to claim this property

Answer 10

within 21 days of becoming aware of the asset

Trustee has 42 days to serve notice to claim property

Question 11

Bankruptcy - can a creditor retain the benefit of an execution if that was not completed and sums paid before bankruptcy commenced?

Answer 11

No

Question 12

Bankruptcy - execution - a court enforcement officer must hold funds over what value for how many days before handing over?
What happens if there is a bankruptcy order in this time period?

Answer 12

If sum of over £1000 obtained, CEO must hold for 14 days.
If during this time he is notified of a bankruptcy petition, he must hand over the balance to the trustee after deduction of costs.

Question 13

Does Commercial Rent Arrears Recovery (CRAR) apply when a trustee has been appointed?

Answer 13

Yes
but there are 3 restrictions

Question 14

What are the three restrictions to CRAR in a bankruptcy?

Answer 14

• CRAR 3 months before bankruptcy
  Proceeds will be charged with payment of preferential creditors, landlord now ranks as preferential
• CRAR post order in respect of pre order rent arrears
  limited to 6 months rent accrued pre order
• CRAR between petition and order
  six month rule should be applied first
  Then the 3 month rule should be applied

Question 15

Bankruptcy - Transactions at undervalue - what is the relevant time?

Answer 15

S339
5 years pre-petition

Question 16

Bankruptcy - Transactions at undervalue - is there a need to show insolvency?
Is it assumed?

Answer 16

S339
pre-petition
0-2 years - No
2-5 years - Yes

Insolvency presumed it to a associate

Question 17

Bankruptcy - Preferences - what is the relevant time?

Answer 17

S340

6 months - non associate
2 years pre-petition - to associate

Question 18

Bankruptcy - Preferences - what has to be shown?

Answer 18

S340
Always have to show insolvency

Have to show desire to prefer - it is assumed if it is to an associate

Question 19

Bankruptcy - Extortionate credit transaction - what is the relevant time?

Answer 19

S343
3 years pre bankruptcy order

Question 20

Bankruptcy - Extortionate credit transaction - do you have to show insolvency?

Answer 20

S343
No

Question 21

Bankruptcy - Extortionate credit transaction - is anything presumed?

Answer 21

S343
Presumed to be extortionate, onus is on the loan company to show it is not

Question 22

Bankruptcy - Transactions defrauding creditors - what is the relevant time?

Answer 22

S423
Anytime

Question 23

Bankruptcy - Transactions defrauding creditors - do you have to show insolvency and is anything presumed?

Answer 23

S423
No and No

Question 24

Bankruptcy - Post petition dispositions - what is the relevant time?

Answer 24

S284
Between petition and the vesting of the estate in the trustee

Question 25

Bankruptcy - Post petition dispositions - do you have to show insolvency and is anything presumed?

Answer 25

S284 No and No

Question 26

Bankruptcy - Excessive Pension Contributions - what is the relevant time? Do you have to show insolvency? Is anything presumed?

Answer 26

S342A to C Anytime No No

Question 27

Bankruptcy - if there is no deed of trust setting out the split of equity for a jointly owned home, what percentages are assumed?

Answer 27

50:50 If one party claims it is more than 50%, then the burden of proof is on them.

Question 28

Bankruptcy - when would rights of occupation of home occur and for what time period?

Answer 28

12 month delay - Non bankrupt spouse has right of occupation - Bankrupt has right of occupation where he has a beneficial interest in the property and any person under 18 has home with bankruptcy

Question 29

Within what time period must the trustee deal with the bankrupts interest in a dwelling house in order to prevent it re-vesting in the bankrupt?

Answer 29

Within 3 years of the date of bankruptcy order

Question 30

The court will not grant a charging order it the value of the bankrupts equity is below the prescribed amount, what is this amount?

Answer 30

£1,000

Question 31

Under what section of the Act may a trustee apply for a charging order on the debtors bankrupts home?

Answer 31

S313

Question 32

Which if the following matters will the court not take into account when looking at an application for an order of possession and sale made by trustee? A - Interests of the bankrupt creditors B - Conduct of spouse as contributing to bankrupt C - Bankrupts Interest D - Needs of any children E - All circumstances of the case

Answer 32

C Bankrupts interest S336

Question 33

Can a trustee call a final meeting to obtain his release if he has been unable to realise an interest in a dwelling unless he has applied to court for a charge?

Answer 33

No

Question 34

How can a trustee prevent automatic re-vesting of a property within the 3 year time period?

Answer 34

- Realise the interest in the property - Apply for order for sale or possession - Apply for a S313 charge - Enter into an agreement with the bankrupt, whereby bankrupt gets property back in return for a promise to pay money into the estate in the future

Question 35

A trustee is required to service notice to state that the dwelling house of the bankrupt is one that the 3 year rule applies. What is the latest time a trustee can serve notice?

Answer 35

Notice cannot be served any later than 14 days prior to the expiration of the 3 year period.

Question 36

What is the maximum value of a charge that can be imposed on the bankrupts home under S313 of the insolvency Act 1986?

Answer 36

The value of the bankrupts interest in the property at the date of the charging order plus statutory interest

Question 37

A windfall may be clawed back for the estate by the trustee in bankruptcy providing it was acquired by the bankrupt within what time frame?

Answer 37

before the expiry of one year beginning with the bankruptcy order

Question 38

In bankruptcy from what date is the bankrupts estate deem vested in the trustee?

Answer 38

Appointment of trustee

Question 39

Does a trustee need to seek directions from court on matters of commercial judgement?

Answer 39

No