Challenging the decision of a trustee in bankruptcy?

Published on
2 min read

An application was made to strike out parts of the Brakes’ (the “Bs’”) application in bankruptcy proceedings.

The Bs and a third party had owned a cottage on trust for the benefit of their partnership. The Bs prior to their bankruptcy had started proceedings against the third party, which claim had then vested in their trustee in bankruptcy. The partnership went into liquidation and the liquidators sold the cottage to the trustee in bankruptcy, who then sold it to the applicant.

The Bs brought an application in the bankruptcy to have the sale of the cottage set aside, on their own behalf and as trustees of the trust on the grounds that they had been denied the opportunity to bid.

The court concluded that as trustees, the Bs were outside the bankruptcy process, as they were trustees of the property for the benefit of the family trust, and were not creditors of the bankruptcy estate in that capacity and so not persons aggrieved by the decision of the trustee in bankruptcy. Consequently the Bs had no standing as trustees to bring the challenge to the trustee in bankruptcy’s decision to sell the property to the applicant.

IN THE MATTER OF STAY IN STYLE (IN LIQUIDATION) sub nom (1) NIHAL MOHAMMED KAMAL BRAKE (2) ANDREW YOUNG BRAKE (Trustees of the Brake Family Settlement) & ORS v (1) SIMON LOWES (2) RICHARD TOONE (Joint Liquidators of the Stay in Style Partnership (In Liquidation)) (3) DUNCAN KENRIC SWIFT (Former Trustee in Bankruptcy of Nihal Brake & Andrew Brake) (4) CHEDINGTON COURT ESTATE LTD (2020)

 

[2020] EWHC 537 (Ch)

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