The questions below are result of ancillary relief divorce case which has resulted in judge joining the Official Receiver to the case after deciding, subsequent to the trial of preliminary issues that a share sale/transfer by me to my sister 24 years ago was done to avoid creditors, even though it was 1 yr before the petitioning creditor had obtained judgement against me, and 3.5 yr before being declared bankrupt in 1992. The shares were 99% of a family business that went on to become successful 10 yr later, and its business in turn was transferred to another family business, with the original being dissolved in 2006. The shares were correctly transferred and duty paid and form stamped by HMRC, it was not a sale at undervalue. At the date of bankruptcy I owned nothing, OR knew I worked for family business but not about share transfer as I was not asked, the business was loss making and balance sheet was hugely negative, even at date of discharge 3 yr later the balance sheet was break even and the profits less than 10k with me being paid wages below the tax threshold and NI threshold, i.e. if I was paid realistic wages the business would still be loss making.1. Is there any statutory time on the action of the official receiver claiming any property that is deemed by judge to be mine?2. Is there any statute of limitation application on such matters, I would assume you know cases where matrimonial homes have been claimed many years later; but isn't that after the official receiver knows about it from the date of bankruptcy?3.Is debt of the petitioning creditor, or any creditors, still valid if they themselves are not in existence either through death or having been dissolved? That is to say can the official receiver try to recover debts when he does not have anyone to pay them to?4.What happens if OR does not know the quantum of debt, because he is not able to establish whether any or all of it was paid back?
Province/Country relating to question : England
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hello,I'm still waiting and am disappointed that no expert has replied to me I appreciate it is a complex question which involves both insolvency law and to a certain extent family law; please could you have this matter seen to as soon as possible.
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Hi thanks for your question. I am not entirely clear where the claims are being made here. If you went bankrupt and were discharged 20 years ago why is this relevant to proceedings today? Generally speaking there is as you may well know there is a 6 year limitation on actions for debt and 12 years for claim under a deed. There are also fixed periods fro certain claims to set aside transactions but none are longer than 12 years. The only cases on the subject say that the time for claiming to set aside a transaction runs from the date of appointment of the trustee in bankruptcy ( in this case the OR). So on the face of it the limitation period has long since expired. The argument open to the OR is that the limitation period should not start running until such time as he knew about the claim but given that he had adequate opportunity to investigate your affairs I think it unlikely that he would succeed or indeed that he would wish to try.A claim is not extinguished either by the death or dissolution of an claimant generally but simply passes to the estate nor successor but again I think it unlikely that any creditor is now going to be able to avoid the limitation period unless there is clear evidence of fraud. I am assuming that as the matter is now in issue you have in fact benefited in some way from the shares even though transferred to your sister?
Thank you for your reply you're quite right to deduce that the judge feels I have benefited, but he is wrong in that any benefit to me has been no more then an employee, and not that of the controller or owner. It's a pity I cannot send you documentation or statements relating to this matter as it would clarify a lot of the issues however although you say that the statute of limitations would prevent anything being done now, the judge has not seen it that way, or rather he has gone around that. Basically he's interpreted matters this way in order to find that the wife has something from a divorce settlement, whereas there is nothing in my name. He’s interpretation is that the share transfer to my sister was an illegal transfer - fraud - to avoid creditors, the reality is even if the shares were not transferred but official receiver had confiscated the shares from my sister they would be worthless then as the company had a negative value. However as mentioned previously, 10 years later the company had made sufficient profits to declare large dividends (to myself, my wife, and other relatives) which were then gifted into the ‘family pot’ to set up another company by transferring one half of its business it.That then went on to make further profits, and these profits were again declared as dividends resulting in the purchase of properties, by yet another company. Each time done to minimise tax.(But judge views it as tax evasion and said at the end of case he will ask HMRC to investigate).Therefore you will see he is taking extraordinary leap which I cannot find any other similar case, nor is the official receiver aware of any similar case, in which a matter can be taken from one event to another and then another, and be determined all to have been assets held for me on trust. In a nutshell the judge is assuming that a constructive trust exist and it is all to my benefit and any assets that exist now in other people's names or in other company’s names are XXXXX XXXXX mine but being held on trust. This is the real question that I am seeking an answer to. Can he actually make those leaps? Would it not also be necessary to show that I have taken direct benefit from them as if I was the owner or controller which I have not. It has been shared and is distributed amongst family members?The 4 numbered questions I think are covered by your answer, but so far as the official receiver is concerned he has not decided to forego any claim even though, as I pointed out previously, he does not know of any creditor in existence, or the quantum of debt, as he has not determined if anything was paid back; he is merely just responding to a High Court judge having joined him in an action in the family division. It may be that you need to discuss this matter with a Family law/ Trust law/ Tax law specialist, at Just Answers to give me a satisfactory reply. All sources that I have tried failed as it seems to be unique situation. I am a litigant in person!
I do not think it is easy to advise without knowing the full facts. One thing you say in your detailed comment is that the company was bale to pay large dividends to your self,your wife and other relatives. How was that possible if you no longer owned the shares? Is this case really about the division of matrimonial assets? Is the judge attributing more assets to you than you claim to own?
Thank you for replying and pointing out a matter which I did not clarify. Yes, the shares were sold to my sister in 1988 but in 1998 she gifted them 25% to H, 25% to W, 25% to S, 25% to M. As all our incomes were below the threshold even payment of substantial(20K each) dividend would keep us below the higher tax threshold and only ACT was paid as required. The split off company which took over certain part of the original business was also formed with these portions, and the original company dissolved in 2006. The new company's subsequent restructuring of shares resulted in a decrease in the percentage owned by H and W, which judge found to be to avoid W potential claim.Yes, the judge is attributing not simply more assets, but all of the assets (in the form of real estate and shares) derived from the companies over the years and which remain today, even though they were not purchased by the company but by dividends declared by the company to individuals who pooled them to buy properties through a third company where the shareholder was another relative. I have previously explained the route chosen by the judge to get around legal issues that arise, as he sees it. I hope a full picture emerges now.
Based upon what you say, I am frankly not surprised that the Judge drew the conclusion that the original transfer was simply to avoid creditors. I think would have drawn the same conclusion.I am not clear what you mean by attributing assets acquired by dividends. If you have a share of assets acquired from dividends paid to you then they are bound to be taken into account in an any matrimonial settlement.If I may say so it sounds as if you may not have benefitted from being a litigant in person. If there are , as appears to be the case , significant family assets then you would be wise to get an experienced family practitioner to act for you. From what you say it is pretty clear that the judge thinks you have manipulated the situation to try and avoid your wife's claim and if you are are going to appeal you are going to need professional help.I am not sure why the judge thinks it aids anyone to bring the OR into the equation as any claim from the OR will simply reduce the amount available to the parties to the marriage.Please let me know if there are any specific additional questions you have but please press accept so I am credited for my time . You can still ask follow up questions.
Thank you for the answer I had actually paid on the 28th of Feb and it should be with Just Answers.
Thanks you have to press "accept" otherwise I do not get credit . Good luck with this and come back to me if you have any further questions
30 years in commercial law
I had previously pressed the accept button but now I have done so again, I would like to get full answer which really requires you to read all the previous e-mails as the questions you ask are actually covered in my text but perhaps not clear for you.Further to your reply of 09.56 on 5th of March, I would like to say that you can be frank as it is really the only way forward. The judge brought in official receiver as he is very pedantic, and has been a High Court judge for 15 years, in which time one of his colleagues who started on the bench at the same time is now in the Supreme Court! Therefore he is not regarded as the most able and as had much criticism from courts above.I had originally intended to post the question in the following way, which was much longer but may improve your understanding. What is the situation concerning a bankruptcy which occurred in 1992 and was automatically discharged being reopened on the basis that a judge finds that the shareholdings in a company were sold by me to a relative three years prior in 1989 therefore a disposition made in avoidance? But was not at undervalue due to the fact that for the subsequent six years the balance sheet was negative and company worthless. Can it be reopened, on the basis that it later became profitable? That would be like saying the official receiver closed the file, only to find former bankrupt won a premium bond later and therefore wants to open it to get back the money (from money acquired after discharge) for the creditors, the critical point being the premium bond was not purchased during the bankruptcy or after the discharge, but before the bankruptcy. The OR having decided it was worthless, and did not bother to take it; but now saying he was not aware of it, and had he been he may have taken it and statute of limitation times can only run from the time he became aware! N.B. unlike a premium bond which has a definitive value (£1) the shares in the company would have been a liability as at the date of bankruptcy the company's balance sheet was £27,000 negative - in effect trading whilst insolvent. If the official receiver had accepted at the time the bond (shares) were not mine but that of another family member (the transfer had taken place prior to even the petitioning creditor having obtained judgement for the debt, let alone having petitioned for bankruptcy) he says he was not aware of it, then his investigations would have led him to find that the company would be liability to him had he taken it on and would not have done so.On the basis it can be reopened, what is the situation if the official receiver has no records other than the court file; this states name of petitioning Creditor (no longer in existence), the amount of its debt, and records that there are other creditors, the amount owed to each is not known, nor whether any have been paid? Basically the official receiver needs my cooperation to determine any of the answers, although it is a requirement that one must oblige him can that requirement apply subsequent to a discharge without bankruptcy first being annulled? Can the principle of double jeopardy apply i.e. can I be examined by OR on matters if I no longer wish to entertain the OR’s interrogation? So when you say you would have drawn the same conclusion as the judge, is that because what is playing on the mind is the fact that a company became successful rather than what it was at that time of the late 80s and early 90s well before the marriage in 96 which was after the discharge in 95. Surely that is wrong! To suggest I have manipulated the situation to try and avoid your wife's claim, would be acceptable if it was done after marriage, but surely cannot be the case eight years before even meeting!What I mean by attributing assets acquired by dividends, is that even if the company had been deemed to be mine or any of its offshoots, it cannot be that dividends paid out to other members of the family and put into the family pot in which I also put in my dividends (i.e. everyone gifts it), to buy properties through another company in which the shareholder is another relative. the finding of the judge is that it is all in a verbal constructive trust for me even though I have not benefited in terms of lifestyle or the enjoyment of the money as previously mentioned, which I argue must be the pertinent question to be asked or determined. Also the relative who subsequently receives dividends from the profits of that company, but being abroad only ACT is payable in UK, and no income tax as the country in which he lives doesn't have any, implies by fact that someone else is the beneficial owner.About your comment concerning the need for legal representation, I would agree, but I cannot afford it, as previously for number of years this case has been running I was funded by legal aid, however LSC has withdrawn the funding subsequent to the judge's findings and my representation of other family members before the court as a McKenzie friend, on the basis that we seem to have similar interest and therefore they can pay for the lawyers or if the judge finds it is all mine then I technically have the means to pay. Until the hearing took place in the High Court, and we only have a provisional judgement, the actual judgement is reserved and to be delivered in couple of weeks, the legal advice I had, from a QC, was that it would be very difficult for the judge to do anything different to what I was saying all along, however the judge has taken it all from an angle no one expected.A reply after consultation with your colleagues in the family division or who deal in equity would be useful, I have no problem paying you extra by way of bonus.
If what you say is correct then the Judge's decision is fundamentally flawed. Whether or not you made a conveyance to avoid your creditors is determined by the facts at the time. i.e. were you solvent when you made the transfer. Was the transfer at market value? whilst subsequent events may shed light upon the circumstances, the fact that something became valuable does not mean it was valuable at the time of the transfer. It has to be judged bey market conditions at the time. Conversely you cannot just say that a company is worth less because it has a balance sheet deficit. There are many many companies that have found themselves in that position but nonetheless have significant value. As a simple example a goodwill write off will produce a balance sheet loss but has no cash flow implications whatsoever. Having said that if the asset was sold for a proper open market price which the evidence supports then there is no basis for setting the transfer aside. It is clear that there is a long history of facts around this. You say the transfer to your sister took place before the marriage but that does not mean it was not a transfer to avoid creditors. It is somewhat odd from any perspective that you should sell and asset to someone and then they should gift half of it back to you and to your wife. I would imagine there was also evidence given about who actually controlled the operation of the company and the related assets.The judge can come to any conclusion based upon the facts but of course if it is completely unreasonable you can appeal. I expect if this is a high court judge whatever your views of his ability compared to his peers, he will try and construct a solid judgement but I have know judges to get it completely wrong .My best advise is to wait the final judgement and take it and all the papers to a solicitor and spend the money to get a view on whether it is realistically appealable. Either that or instruct a good barrister to advise.
Thank you for reply and advice. I actually think the judge is okay. The case was probably given to him because of his past career in Chancery Division. He is reserving judgement in order to get the wrinkles ironed out. Some of the facts he has are actually wrong, simply because the people who represented me and family in the past got it wrong themselves, and I haven't bothered to correct it by mentioning it. My view was the statements and affidavits made are honest and correct. If lawyers have made wrong statements as the case has progressed and things have changed from what they were some years back, then it is for the other side to have done their research from companies house. I can see you are a good lawyer because you are picking out in each reply things that I have not verified but are pertinent to the final decision. Example you say it is odd the shares were given to my sister, the reason for this was that she had guaranteed the company's overdraft and lease on premises and vehicles therefore she was taking the risk, but when she emigrated to USA she ended her involvement.
i am sure the judge wishes to polish his decision and make it as bullet proof as possible. I am also sure there is an explanation for everything it is ultimately for the judge to decide on who he believes and if his decision does not fly in the face of common sense you may be stuck with the conclusions.Let me know if you have specific additional questions.
Hello,You may remember you gave me some advice previously I'm just wondering whether it is possible to e-mail you the judgement of the High Court and seek your opinion on grounds for appeal, or is this not possible within the service?
If you are able to have the judgement sent through either by attaching it or by emailing it via customer services I can look at it but I would make the point that I do not believe you ever accepted my original answers so I have never been credited for my time. secondly depending upon the length and complexity of the judgement I would need to be paid a reasonable fee. There is a mechanism to do this I believe.
Thank you. You were paid on "Monday, March 05, 2012 8:02 PM (GMT/GMT)" when I accepted your answer. Any subsequent accepts is returned with reply "you have already accepted answer".I will see if it is possible to send attachment but I fear it will be too big. If you tell me your real name I will look you up and communicate pay directly.My intention is to become a subscription member so there should be no problem in future payments.
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