Property insolvency

Property insolvency

This Overview points out the key areas for property disputes lawyers dealing with property insolvency, and indicates where to find information. For a general introduction to property insolvency, see Practice Note: Quick guide to property insolvency.

Property insolvency generally

Insolvency of the tenant

The landlord will be concerned to keep the premises safe and secure, and to review its options for recovering arrears, obtaining possession, and enforcing compliance with covenants in the future. Depending on the insolvency process, there may be important restrictions on the action that landlords can take.

For a summary of the restrictions that apply in insolvency, see Practice Note: Quick guide to property insolvency—Insolvency of a tenant, and for further guidance see Practice Note: Landlord steps to take if tenant becomes insolvent—checklist.

Insolvency of the landlord

Insolvency of the landlord is likely to create a number of concerns for a tenant. These may include where to pay rent, whether any rent deposit is safe, whether the landlord will comply with its obligations in the lease, how to deal with lease renewals or rent reviews, and the effect of disclaimer of the

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This week's edition of Property Disputes weekly highlights includes: analyses of Court of Appeal decisions declaring a right to manage claim notice invalid for procedural non-compliance and interpreting a local authority’s discretionary succession policy, a High Court decision that resuscitating a conceded lease construction point is an abuse of process and an Upper Tribunal decision allowing partial modification of a restrictive covenant.

Insolvency, declarations of trust, loan agreements, artificial asset protection, sham transactions, transactions defrauding creditors, interspousal asset transfers, change of position defence and wife’s entitlement to share of husband’s assets (Sayers v Dixon)

Restructuring & Insolvency analysis: The court held that six declarations of trust (DoTs) executed by the transferor (Mr Dixon) in favour of his wife (Mrs Dixon) constituted transactions defrauding his creditors within the meaning of section 423 of the Insolvency Act 1986 (IA 1986) and that two of them, purporting to transfer all his future assets and income to Mrs Dixon, along with an accompanying loan agreement, were shams which were void and ineffective. It set aside the DoTs and ordered Mrs Dixon to restore the value of three transferred properties (which had been converted into £551,589 cash) to Mr Dixon’s trustees in bankruptcy (trustees) together with interest of £101,726. It also ordered an account to be taken of the funds that had been transferred to Mrs Dixon or on her behalf by Mr Dixon over the seven years between the date of the DoTs and his bankruptcy. The court dismissed Mrs Dixon’s defence of change of position to the trustees’ claim for restoration, finding that even if such a defence were generally available (which is unclear), she had not acted in good faith and could not rely on it. It also dismissed her defence that, having been married to Mr Dixon for many years, she was entitled to half his assets and/or an entitlement to a share of them by virtue of a right to be maintained. Written by Jonathan Lopian, barrister at New Square Chambers, who acted for the successful claimants.

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