Insolvency Newsflash January 2007

1 APRIL 2007 & THE THREE YEAR RULE

courts are taking up to 8 weeks to process Bankruptcy applications

so you need to take action now

S283A Insolvency Act 1986, provides that an interest in a qualifying property will, after a period of three years commencing with the date of the bankruptcy, revest automatically in the bankrupt - unless during the said three year period the Trustee prevents automatic revesting.

In all bankruptcies it is vital that the three year rule does not expire before you have taken one of the five prescribed steps, if it is commercial to do so. Failure to do so may result in a loss being suffered by the estate, and personal liability for a Trustee in Bankruptcy pursuant to ss303-4 IA 1986.

Preventing automatic revesting

The three year rule will not apply if during the three year period the Trustee:-

1. Realises the Bankrupt’s interest in the property;

2. Applies (it is believed issuing an application is sufficient) for an order for sale pursuant to s335A Insolvency Act 1986;

3. Applies for an order for possession of a dwelling-house pursuant to s336 Insolvency Act 1986;

4. Applies for a charge pursuant to s313 Insolvency Act 1986; or

5. Agrees with the bankrupt that the bankrupt shall incur a specified liability to the estate in bankruptcy (with or without interest).

We do not recommend option 5.

How we can help

1 April 2007 is rapidly approaching, and you ought to review all of your bankruptcy files to avoid any potential personal liability.

We can review bankruptcy files to ascertain whether any action is required at this stage. If action is required then we can issue a ‘protective’ application to prevent the three year rule applying. This can be undertaken for a fixed fee. All that we require to make such an application is:-

The Bankruptcy Order;

Your Certificate of Appointment;

The Official Receiver’s first report;

The full address of the property in question; &

Contact details for the debtor, and any third party claiming an interest in the property.

Should you wish to instruct this firm to review your files, in respect of each file please let us have these details.

General

Please contact your usual Sprecher Grier Halberstam LLP contact in order to discuss the above. Details of the partners in this firm’s insolvency department are as follows:-

Name Direct Dial Telephone No. Email address

Ian Grier 020 7264 4450 iang@sghlaw.com

Edward Judge             020 7264 4452                           edwardj@sghlaw.com
Daniel Sejas                 020 7264 4451                            daniels@sghlaw.com
Nicholas Hughes       020 7264 4453                            nicholash@sghlaw.com
Ken Titchen                  020 7264 4454                            kent@sghlaw.com

For more information please contact any of the Insolvency Partners.

This Newsflash is issued by the Corporate Law Department. Should you require further help and advice please contact Emma Shipp emmas@sghlaw.com 0207 264 4406. This newsflash summarises complex case law and should not be relied upon in any way as a definitive statement of the law.

Sprecher Grier Halberstam LLP is a limited liability partnership registered in England and Wales (number OC300228). Its registered office is at One America Square, Crosswall, London EC3N 2SG. It is regulated by the Solicitors Regulation Authority. A list of members of Sprecher Grier Halberstam LLP is available for inspection at its registered office. Its VAT registration number is GB 318 1465 66.

Its professional indemnity insurance providers are: International Insurance Company of Hannover, 4th Floor, 60 Fenchurch Street, London EC3M 4AD

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