Debtor payments leading up to the making of a bankruptcy order—Thomas and another v D’Eye and others

Debtor payments leading up to the making of a bankruptcy order—Thomas and another v D’Eye and others

What are the consequences of a money transaction being void under section 284 of the Insolvency Act 1986 (IA 1986), and what relief can the court grant? Joseph Curl, barrister at 9 Stone Buildings, considers the significance of the recent decision in Thomas and another v D’Eye and others.

Original news

Thomas and another v D’Eye and others [2016] Lexis Citation 50, [2016] All ER (D) 66 (May)

The Bankruptcy High Court allowed an application for relief by trustees in the bankruptcy of Dean D’Eye, who had made his living from residential and commercial property and was indebted to around the sum of £2.8m. The court held that money in certain accounts belonged to Dean D’Eye, that a flat which had been purchased out of money from one of the accounts was a bankruptcy asset, and that the transfer of shares in a company controlled by Dean D’Eye had been a sham.

What were the facts?

This case concerned how to treat payments made by a debtor during the period leading up to and after his bankruptcy. Having started off as an antecedent transaction application, it developed in an unexpected way into a claim to void payments.

A statutory demand was served on Dean D’Eye on 11 July 2011. After a drawn out and ultimately unsuccessful application to set aside the demand, a bankruptcy petition was presented on 28 May 2012. A bankruptcy order was made against Dean D’Eye on 31 July 2012. Trustees in bankruptcy were appointed on 23 September 2012. After their appointment, the trustees discovered that on 24 January 2012 (at a time when the application to set aside the statutory demand was on-foot) the bankrupt had transferred £321,919 from a bank account in his own name to a bank account in the name of his father, Derek D’Eye. It was subsequently transferred to, and dissipated from, another bank account

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.