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Francis Collaço Moraes, barrister, of Three Stone, examines the Court of Appeal’s approach to the valuation of what trustees in bankruptcy could recover after a bankrupt transferred his shares subsequent to presentation of the bankruptcy petition. In this case, the value of the shares had fallen before they were delivered up to the trustees.
Ahmed and others v Ingram and another  EWCA Civ 519,  All ER (D) 144 (Mar)
Where a bankrupt disposes of a non-cash asset post-petition, which is caught by section 284 of the Insolvency Act 1986 (IA 1986), it is vital to ensure the prompt appointment of a trustee in bankruptcy (trustee).
It is important to identify the wrongful act of the recipient of the non-cash asset with respect to the bankrupt’s estate to establish the date when the breach occurs.
On appointment, the trustee must promptly consider whether to demand the return of the non-cash asset. The trustee must also consider what steps should be taken to recover and then market and sell the non-cash asset, and promptly undertake those steps.
As the remedy is restitutionary, it is important to identify the loss suffered by the bankrupt’s estate in respect of the disposal of such non-cash asset, and if necessary obtain expert evidence.
If a validation order is sought in respect of a non-cash asset, the application should be made promptly to minimise the sum that may have to be paid to the estate, particularly where the asset has a fluctuating value.
Careful consideration must be given to the basis upon which the asset should be valued, as the basis of valuation may dramatically affect the sums recoverable.
The appellants were siblings of the bankrupt. The respondents were his trustees.
After the presentation of the bankruptcy petition on 23 January 2007, the bankrupt had entered an individual voluntary arrangement (IVA) which had been passed as a result of the votes
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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.
0330 161 1234