Equitable accounting—how it works in practice
Equitable accounting—how it works in practice

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • Equitable accounting—how it works in practice
  • What is equitable accounting?
  • How equitable accounting applies in practice
  • When equitable accounting applies
  • The exceptions to equitable accounting
  • Summary of equitable accounting

This Practice Note looks at equitable accounting, what it is, how and when it applies. It does not look at how the trustee in bankruptcy (trustee) ascertains and values any interest they may have in property, what assets vest in them, how they release any interest and the equity of exoneration. For further reading on this, see Practice Notes:

  1. Property that vests in the trustee in bankruptcy on bankruptcy and how the trustee in bankruptcy ascertains the extent of their interest in it

  2. Protecting a trustee in bankruptcy's interest in property following their appointment

  3. The equity of exoneration and how it applies in practice

  4. Possession and sale applications in respect of a bankrupt's family home

What is equitable accounting?

Equitable accounting is a process which allows an account of the sale proceeds of the property to take place before the terms of any express or constructive trust take effect and applies as an alternative/addition to the constructive or express trust. It seeks to alter the division of net sale proceeds (ie you get back what you put in). It is a way for a non-owner to gain a share in the net sale proceeds or a co-owner to increase their share in the net sale proceeds. It is not a way for a non-owner/co-owner to gain/increase their interest in the property (ie from a 50% share

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