Save it for a rainy day—bankruptcy and sham trusts (Murphy and Hyde v Munir)

Article summary

Restructuring & Insolvency analysis: Mr Munir purported to transfer the entire beneficial interest in his substantial London property portfolio to various members of his extended family in the years before he was made bankrupt. He entered into no less than three deeds of trust for this purpose. The court found these deeds of trust were a sham not intended to have legal effect. Alternatively, it was found that the deeds were transactions at an undervalue and transactions defrauding creditors. Mr Munir’s wife was said to be a trustee in respect of two of the trust deeds, but her evidence was that she could not read English and had no idea what she was signing at the time. The third trust deed was a self-declaration trust. Accordingly, the court held that the intention of Mr Munir alone as settlor that was decisive. However, despite being named as a respondent, Mr Munir did not take part in the...