Bankruptcy and family financial remedy proceedings

The relationship between bankruptcy and financial remedy proceedings has been analysed in a number of cases in both the bankruptcy and family courts. It is not uncommon for bankruptcy proceedings to be in existence while an application for a financial remedy under the Matrimonial Causes Act 1973 (MCA 1973) or the Civil Partnership Act 2004 (CPA 2004) is ongoing. Concurrent proceedings can create conflict when it comes to the division of assets and impact the financial remedy proceedings. There are also instances of bankruptcy proceedings being commenced with the dominant intention of frustrating financial remedy proceedings.

The three main considerations regarding bankruptcy proceedings in terms of their effect on financial remedy proceedings are:

  1. the position of each court when there are concurrent bankruptcy and financial remedy proceedings

  2. the powers the court has to set aside bankruptcy proceedings if they were commenced to defeat the other party’s application for a financial remedy

  3. the circumstances in which the bankruptcy court can unwind financial remedy orders, including property adjustment orders

See Practice Note: Dos and don'ts for family lawyers when

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Monumental Supreme Court decision on matrimonialisation and sharing principle (Standish v Standish)

Family analysis: The Supreme Court’s much-anticipated judgment confirms unequivocally that the sharing principle does not apply to non-matrimonial property. Sharing of matrimonial property will usually be 50:50, though there may be a departure from equal division where justified. Non-matrimonial property typically has either a pre-marital origin, or, where it is received during the currency of the marriage, an external source (eg an inheritance). Title to an asset is expressly not determinative as to whether that asset is or is not matrimonial. Though non-matrimonial property may become matrimonial (ie ‘matrimonialisation’) this will depend on how the parties have been dealing with the asset and whether, over time, they have been treating that asset as shared between them. The concept of matrimonialisation is to be applied neither ‘widely’ nor ‘narrowly’ (contrary to what the Court of Appeal had held)—again, the enquiry should focus on how the parties have dealt with the asset. Where an asset is transferred from one spouse to another with the intention to save tax (as had occurred in the case), this will not normally show that the asset is being treated as shared. The Supreme Court ultimately upheld the decision to dismiss the wife’s appeal, though it did not wholly agree with the Court of Appeal’s reasoning. Pursuant to that decision (made on the sharing basis) the wife would be provided with circa £25m of the total assets figure of circa £132.6m, being half of the matrimonial assets figure of £50.48m. David Wilkinson, solicitor at Slater Heelis, considers the judgment.

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