When and how can trustees set aside ancillary relief orders? (Sands v Singh)

When and how can trustees set aside ancillary relief orders? (Sands v Singh)

Is there any way for trustees in bankruptcy (trustees) to circumvent the Court of Appeal’s decision in Hill v Haines? John de Waal QC, barrister at Hardwicke Chambers, and Mark Sands, partner at RSM, review the judgment in Sands v Singh, in which the High Court was asked, among other things, to set aside an ancillary relief (AR) settlement entered into prior to bankruptcy as a transaction at an undervalue (TAU).

Original news

Sands (as trustee in bankruptcy of Mr Tarlochan Singh) v Singh and others [2016] EWHC 636 (Ch), [2016] All ER (D) 209 (Mar)

The Chancery Division ruled on an application by the first respondent’s trustee in bankruptcy, challenging transactions that the first respondent had entered into in 2010/11 in relation to a property he owned, the first respondent having subsequently been adjudged bankrupt, including a trust deed and consent order disposing of AR proceedings brought by the first respondent’s wife. It held that one of the charges was a sham and so a nullity, but that a second charge had not been proved to be either a sham or a preference within the meaning of section 340 of the Insolvency Act 1986 (IA 1986), and the challenge to the trust deed and consent order also failed.

Whatwas the background to the application?

Some nine months before Tarlochan Singh was made bankrupt owing his creditors £1m, and as part of a settlement reached in AR proceedings, he put the valuable matrimonial home—which was registered in his sole name—in trust for his two young children. Mr Singh had earlier also granted charges to his father and sister. Mr Singh’s trustee, Mark Sands, applied to set aside the charges as shams or alternatively preferences and the AR settlement as a TAU pursuant to IA 1986, s 339.

Whatwere the legal issues the judge had to decide?

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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.