Q&As

What authority is there for saying that ‘a trustee in bankruptcy stands in the shoes of the bankrupt’?

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Produced in partnership with XXIV Old Buildings
Published on LexisPSL on 21/09/2018

The following Restructuring & Insolvency Q&A produced in partnership with XXIV Old Buildings provides comprehensive and up to date legal information covering:

  • What authority is there for saying that ‘a trustee in bankruptcy stands in the shoes of the bankrupt’?

What authority is there for saying that ‘a trustee in bankruptcy stands in the shoes of the bankrupt’?

Under bankruptcy law, the bankrupt’s property subject to certain exceptions, called the estate, vests in the trustee in bankruptcy automatically upon the trustee’s appointment (section 306 of the Insolvency Act 1986 (IA 1986)). What lies behind the concept of the trustee standing in the bankrupt’s shoes is the principle that the trustee simply replaces the bankrupt as the owner of the estate and, subject to any special rules such as the anti-avoidance provisions or ‘the use it or lose it’ provisions relating to the bankrupt’s home, is in no better or worse a position than the bankrupt would have been in relation to the property.

The rule is set out in Title acquired by trustee: Halsbury’s Laws of England [406], which repeats the wording used in previous editions:

‘The general rule is that the trustee in bankruptcy takes no better title to property than the bankrupt himself had. The bankrupt’s property passes to the trustee in the same plight and condition in which it was in the bankrupt’s hands, and is subject to all the equities and liabilities which affected it in the bankrupt’s hands, to all dispositions which have been validly made

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