Once a bankruptcy order has been made by the court, a trustee in bankruptcy will be appointed to collect in and sell the bankrupt's assets for the benefit of the creditors. As at the date of the order, the bankrupt's estate vests in the trustee. This note defines the 'bankruptcy estate' and looks at the treatment of income, pension and matrimonial home on bankruptcy. It also considers the circumstances where assets disposed of by the bankrupt before the commencement of the bankruptcy may be reclaimed by the trustee and the treatment of after-acquired property.Jump to full report >>
This briefing paper considers in detail those assets that would pass to the trustee in bankruptcy as at the date of the bankruptcy order and forms the ‘bankrupt estate’. It applies only to England and Wales. Scotland has its own legal procedure for individual insolvency, known as 'sequestration'.
This paper looks at the assets of the bankrupt that vest in the trustee in bankruptcy immediately upon his/her appointment, pursuant to section 306 of the Insolvency Act 1986 (IA 1986), and outlines the steps that should be taken by the trustee to protect and secure those assets for the benefit of the creditors. Specifically, it considers the treatment of the following assets on bankruptcy: income, pension, and property (including the matrimonial home). In addition, this paper considers the treatment of so-called ‘after-acquired property’. The trustee can, subject to certain time limitations, claim after-acquired property for the benefit of the creditors.
Finally, this note also considers the circumstances where assets disposed of by the bankrupt before the commencement of the bankruptcy may be reclaimed by the trustee as part of the bankrupt estate. The trustee has a wide range of powers under the IA 1986 to investigate events which took place prior to the bankruptcy. If there is sufficient evidence, the trustee’s investigations may lead to a court application to overturn ‘undervalue’ or ‘preference’ transactions.
Commons Briefing papers SN05271
Author: Lorraine Conway