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Personal insolvency verses matrimonial law

By Ian Defty, partner at Begbies Traynor and insolvency advisor at Legal Futures Associate  Integrated Dispute Resolution.

It is fair to say that there has, for many years, been a “difference of opinion” between the law governing personal insolvency and matrimonial law with each “side” believing that they are right and should take precedence.

The principal, sometimes conflicting, legislation is covered in the Insolvency Act 1986 and the Matrimonial Causes Act 1973. However, the differing courts can and will give wide discretion when determining whether and how a married couple’s assets are to be divided.

In accordance with the Matrimonial Causes Act 1973 there is an expectation that assets accrued during the marriage should be regarded as jointly owned between the spouses and normally be divided equally between the parties, whereas assets held by one spouse or the other before the marriage should be left to that party unless there is good reason to divide them. The matrimonial home is usually always considered as a matrimonial asset to which the sharing principle applies.

In personal insolvency the overriding principle is to see that the creditors as a whole get dealt with fairly and in accordance with insolvency law which may often seem to go against matrimonial law which seeks to ensure that a spouse and maybe children are dealt with first and foremost.

In general terms, all property belonging to or vested in the bankrupt at the commencement of the bankruptcy forms part of the bankruptcy estate and will vest automatically in the trustee in bankruptcy immediately upon their appointment. On the face of it, this may appear unhelpful to the bankrupt’s spouse, especially if they are divorcing.

Section 306 of the Insolvency Act 1986 sets out that the bankrupt’s estate shall vest in the trustee immediately on their appointment taking effect or, in the case of the official receiver, on his becoming trustee.

The Insolvency Act 1986 goes on to set out the relevant insolvency legislation regarding what defines a bankrupt’s affairs (S.283) and the restrictions on dispositions of property (S.284).

Section 283 defines a bankrupt’s estate as;-

  • all property belonging to or vested in the bankrupt at the commencement of the bankruptcy, and
  • any property which by virtue of any of the following provisions of this Part is comprised in that estate or is treated as falling with the preceding paragraph.

Section 284 sets out the restrictions on dispositions of property as follows; –

  • Where a person is made bankrupt, any disposition of property made by that person in the period to which this section applies is void except to the extent that it is or was made with the consent of the court or is or was subsequently ratified by the court.
  • Subsection (1) applies to a payment (whether in cash or otherwise) as it applies to a disposition of property and, accordingly, where any payment is void by virtue of that subsection, the person paid shall hold the sum paid for the bankrupt as part of his estate.
  • This section applies to the period beginning with the day of the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy petition] and ending with the vesting, under Chapter IV of this Part, of the bankrupt’s estate in a trustee.
  • The preceding provisions of this section do not give a remedy against any person –
  1. in respect of any property or payment which he received before the commencement of the bankruptcy in good faith, for value and without notice that the bankruptcy application had been made or (as the case may be) that the bankruptcy] petition had been presented, or
  2. in respect of any interest in property which derives from an interest in respect of which there is, by virtue of this subsection, no remedy.
  • Where after the commencement of his bankruptcy the bankrupt has incurred a debt to a banker or other person by reason of the making of a payment which is void under this section, that debt is deemed for the purposes of any of this Group of Parts to have been incurred before the commencement of the bankruptcy unless —
  1. that banker or person had notice of the bankruptcy before the debt was incurred, or
  2. it is not reasonably practicable for the amount of the payment to be recovered from the person to whom it was made.
  • A disposition of property is void under this section notwithstanding that the property is not or, as the case may be, would not be comprised in the bankrupt’s estate; but nothing in this section affects any disposition made by a person of property held by him on trust for any other person.

If bankruptcy precedes an order made under the Matrimonial Causes Act the legal and practical outcome is straightforward and the assets vest in the trustee. Difficulties arise when the order under the Matrimonial Causes Act 1973 precedes the bankruptcy. The impact of the making of a bankruptcy order on matrimonial proceedings will therefore depend on the point that the matrimonial proceedings have reached.

Where a person has been declared bankrupt (or a bankruptcy petition has been presented against the debtor) prior to the making of a financial remedy order under matrimonial law, the matrimonial court is restricted in the financial remedy order it can make. Generally speaking, the matrimonial court cannot make a property adjustment order as the bankrupt’s estate will have vested in the trustee under the Insolvency Act 1986.

In accordance with S.336 of the Insolvency Act 1986, where an application is made by the trustee to realise the matrimonial home after a year since the vesting of the bankrupt’s estate in the trustee, there is a presumption that the interests of creditors outweigh all other considerations that will include that of the spouse (and other family members such as children).

The transfer of an interest in the matrimonial home pursuant to a consent order made under s.24 of the Matrimonial Causes Act 1973 constitutes a “disposition” for these purposes and is therefore void (Re Flint [1993]). This was reinforced in 1994 with Woodley v Woodley (No. 2) [1993] 2 FLR 477 by where the Court of Appeal held that the presentation of a bankruptcy petition is not a disposition for the purposes of s.37 of the Matrimonial Causes Act 1973 and cannot be challenged as an attempt to avoid an order for matrimonial relief. Therefore, the correct way to attempt to challenge an allegation of a spouse using bankruptcy as a fraudulent device to defeat his/her divorcing spouse’s matrimonial claim ‘s claim is to seek for the bankruptcy order to be annulled under s 282(1)(a) by the court exercising insolvency jurisdiction. It is not open to a judge of the Family Court to use the Civil Procedure Rules to transfer insolvency proceedings to the Family Court be dealt with as part of the financial remedy proceedings, per Arif v Zar [2012] EWCA Civ 986.

A matrimonial property transfer order made after the presentation of the bankruptcy petition is a void disposition by the debtor for the purposes of s.284 of the Insolvency Act. In 2010 a matrimonial settlement by ex-spouses which had not been finalised by the time a creditor issued a bankruptcy petition against the husband was struck out by the court as it constituted a disposition of the spouse’s property, per Warwick v Yarwood [2010] EWHC 2272.

Greg Williams, a barrister at Coram Chambers, London, who specialises in matrimonial finance cases, said: “During the last decade, ultralow interest rates combined with a generally high rate of employment has meant that our day-to-day divorce cases rarely feature bankruptcy issues. That may be about to change: the impact of Covid 19 and Brexit is likely to be felt this year. If personal or household debts becomes unsustainable, practitioners and their clients need to be alert to potential insolvency issues. Assets which would otherwise form part of the matrimonial pot can be lost entirely to a successful bankruptcy petition. Or we may see an increase in applications from trustees in bankruptcy to sell family homes to the chagrin of the remaining spouse and children.”

For more information or to discuss an insolvency matter within matrimonial law please contact IDR on admin@integrated-dr.com or 0207 8465 600.

 

Irwin Mitchell Boosts Construction Team

Jonathan More joins Irwin Mitchell’s London office from chambers practice, Spencer West LLP, where he was the lead construction disputes partner.

His appointment takes Irwin Mitchell’s specialist construction team to 18, with four partners. The team is led by Mark Clinton and sits within the firm’s property division, which now numbers 28 partners and 147 qualified lawyers.

The law firm’s growth has been party driven by legal arguments about cladding works since the 2017 Grenfell Tower fire.

Before joining Spencer West, Jonathan More was a partner at Fenwick Elliott, where he worked on a variety of construction dispute related work. He also has eight years’ experience of working in-house. His work from 2009 to 2015 with Transport for London and Crossrail led to him becoming an expert on NEC contracts, with experience of all other major standard contract forms.

Mark Clinton, head of construction & engineering at Irwin Mitchell said: “Jonathan’s arrival will be a real boost to our national construction and engineering  practice, particularly in London and will complement the arrival of construction partners Edward Davies and Richard Allan in Manchester just over 12 months ago.”

“Our team has been inundated recently, supporting clients dealing with ‘the cladding crisis’, which shows no sign of abating in the short term. Jonathan’s appointment comes just at the right time and we will benefit from his great experience and strong reputation. His entrepreneurial skills will help us as we drive forward the growth of our contentious practice.”

Jonathan More said: “I am very excited to be joining Irwin Mitchell. The continued growth the firm has achieved in recent years is evidence of its success and entrepreneurial approach in the provision of legal services. The opportunity I have been given to join and help grow the firm’s construction team from London is unique and one which I am certain will see us continue to thrive in a sector that is so important to day-to-day life.”

 

Allen & Overy Boots European Antitrust Team with Sidley Austin Hire

Magic Circle law firm Allen & Overy has added to its London team with the hire of Sidley Austin’s former global co-head of antitrust.

Kristina Nordlander has over 23 years of experience in broad areas of European Union antitrust litigation and has been with Sidley Austin since 2005. Nordlander focuses on big tech and life sciences, with clients on either side of the Atlantic. She was responsible for founding the Women’s Competition Network (WCN) in Brussels in 2008, an international organisation of female senior competition law and policy professionals. Following the appointment to her new role, Nordlander will split her time between Brussels and her base in London.

In a statement, Allen & Overy antitrust co-head Philip Mansfield said, “Her depth of experience and range of expertise in terms of clients and geography fit perfectly with our strategy for growth. Kristina’s hire is an illustration of our commitment to investing in our global antitrust team, as a strategic priority of the firm.”

More US Law Firms Delaying Large-Scale Office Returns Amid Omicron Fears

Amid the emergence of the Omicron variant of coronavirus, an increasing number of law firms in the United States are delaying large-scale office returns and introducing other Covid-19 measures to protect employees. One large US firm has told employees to work from home, while another is now explicitly requiring Covid-19 booster shots for staff.

On Monday, several large US firms confirmed that they were delaying their return-to-office dates, including Willkie Farr & Gallagher, Cooley, and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo.

According to an email seen by Reuters, Debevoise & Plimpton told its employees on Friday to work remotely until January 7. The firm had planned for its lawyers to begin a gradual return plan by January 10. However, in the email seen by Reuters, presiding partner Michael Blair said that the firm will wait until early next month to review whether or not the plan should still go ahead.

Like many businesses, recent months have seen law firms struggling with the question of when and how to bring staff back into offices, even on a part-time basis. Some firms had planned to make the return last summer, but the spread of the Delta variant saw such plans upended for many.

Markus Fell­ner joins Leaders in Law as the exclusive Banking & Finance Law member in Austria

Leaders in Law, the leading platform in its field, is delighted to welcome Markus Fell­ner as our exclusively recommended & endorsed Banking & Finance Law expert in Austria. Markus’ office is located in Vienna.

Markus Fellner is a founding partner at fwp and specialises in banking and finance, corporate and M&A, insolvency law and restructuring, and dispute resolution.

As a specialist speaker and author of specialist publications on banking & finance, company law, insolvency law as well as restructuring, Markus Fellner, with the support of his team, stands for exceptional quality, profound expertise and long-term experience. His clients include both domestic and international companies and financial institutions. The international character of the Austrian business law firm fwp is highlighted by regular cooperation with leading partner law firms in a network spanning all relevant jurisdictions.

If you require any assistance in this area, please use the contact details provided in Markus’ profile below or contact us at info@leaders-in-law.com & we will put you in touch.

Wang Zhengyang joins Leaders in Law as the exclusive Arbitration Law member in China

Leaders in Law, the leading platform in its field, is delighted to welcome Wang Zhengyang as our exclusively recommended & endorsed Arbitration Law expert in China. Wang’s office is located in Shanghai.

Mr. Wang Zhengyang specializes in the areas of litigation, arbitration, and foreign investment. He has profound knowledge of Chinese law and more than 30 years of legal practice experience, including 5 years in Court.

In the field of civil and commercial affairs, Mr. Wang has provided high-quality advisory services and litigation & arbitration legal services for many state-owned and private enterprises in the fields of finance, oil and gas, construction and real estate, manufacturing, logistics, and trading. In the criminal field, Mr. Wang has successfully defended many companies and individuals in major and complex criminal cases involving loan fraud, illegal business operation, contract fraud, and bribery.

Mr. Wang also actively provides criminal compliance training services for corporate customers, member companies of the chamber of commerce, member companies of the industry association, to help companies prevent criminal legal risks. Furthermore, Mr. Wang also specializes in foreign legal services. He has successfully defended foreign-funded enterprises and individuals involved in intellectual property infringement disputes, labour disputes, shareholder disputes, contract disputes, debt recovery disputes, illegal personal detention, contract fraud, illegal possession of drugs, etc.

If you require any assistance in this area, please use the contact details provided in Wang’s profile below or contact us at info@leaders-in-law.com & we will put you in touch.

Italian Freezing Of Redundancies: Better To Summarize

Italian government identifies a solution to face the pressures received (DL 99/2021 of last June 30, Art. 4).

Employers in the fashion and extended textile sector with the beginning of the Ateco code 13, 14 and 15 remain precluded until 31 October 2021 from the possibility of individual and collective economic redundancies.

In view of the block, it was possible for a maximum duration of seventeen weeks in the period between 1 July and 31 October 2021 to grant the ordinary wage supplement treatment (art.19 and 20 DL 18/2020) without the payment of the additional contribution.

Lowering the new provision in the context of the ‘Sostegni’ Decree (art.8 DL 41/2021 converted by L 69/2021), it follows that:

  • The general block on dismissals for workers of companies that have CIGO and extraordinary CIG (especially industry and agriculture) ended on 30 June 2021
  • Redundancies are forbidden until October 31, 2021 for employers in the fashion and extended textile sector with the beginning of the Ateco code 13, 14 and 15
  • Redundancies are prohibited until October 31, 2021 for workers of companies covered by ‘FIS’ and instruments in derogation (especially tertiary)

In any case, while the block is in effect, it is always possible to terminate the employment relationship in the following cases

  • corporate collective agreement
  • expansion contract
  • reinstatement for change of contract
  • bankruptcy
  • definitive termination of the company’s business (which does not involve the transfer of a company or one of its branches)
  • just-cause dismissal
  • dismissal for disciplinary reasons
  • dismissal for exceeding the grant period of illness
  • dismissal for failure to pass the probationary period
  • dismissal for reaching age for the use of the old-age pension
  • dismissal for unfitness for duties
  • dismissal of the domestic worker
  • dismissal of the manager (even if a recent jurisprudential orientation is contrary)
  • the termination of the apprenticeship at its expiration date
  • consensual employment terminations and resignations for just cause

Dr. Benno A. Packi joins Leaders in Law as the exclusive Real Estate Law member in Germany

Leaders in Law, the leading platform in its field, is delighted to welcome Dr. Benno A. Packi as our exclusively recommended & endorsed Real Estate Law expert in Germany. Dr. Benno’s office is located in Berlin.

Dr. Benno A. Packi advises clients on corporate and real estate transactions, project developments and from a legal perspective on financing. Dr. Packi advises stock corporations as well as medium-sized companies and successful start-ups on corporate and capital market law, restructuring measures including group law and transformation law, as well as foreign investors entering the German and European market.

In addition, Dr. Packi advises wealthy private individuals on corporate and asset succession, including foundation solutions. Dr. Packi represents clients in litigation including arbitration, in particular in post-M&A disputes and in liability matters of managing directors. His professional experience includes advising companies in the real estate, biotechnology and pharmaceutical, manufacturing, IT, energy, trade and logistics sectors.

If you require any assistance in this area, please use the contact details provided in Dr. Benno’s profile below or contact us at info@leaders-in-law.com & we will put you in touch.

Brian W Burkhalter joins Leaders in Law as the exclusive Construction Law member in Georgia, USA

Leaders in Law, the leading platform in its field, is delighted to welcome Brian W Burkhalter as our exclusively recommended & endorsed Construction Law expert in Georgia, USA. Brian’s office is located in Atlanta.

Brian W. Burkhalter is an experienced construction and litigation attorney and a trusted business counselor to his clients. He manages a broad-based commercial litigation practice with an emphasis in representing clients in the areas of construction law and litigation. He has experience in all phases of a project, including bid and proposal preparation, contract award controversies, and performance-related disputes and claims.

A significant portion of his practice involves claims avoidance through assisting clients in every phase of the construction process, from the negotiation and drafting of construction contracts to educating clients through day-to-day review of projects, contracts, issues and project documents. Additionally, Brian has extensive experience in litigation and dispute resolution before arbitration panels, administrative agencies and litigation in state, federal and appellate courts. He has represented commercial general contractors, specialty subcontractors, design and engineering professionals and product suppliers.

If you require any assistance in this area, please use the contact details provided in Brian’s profile below or contact us at info@leaders-in-law.com & we will put you in touch.

Mubarak Al-Sulaiti joins Leaders in Law as the exclusive Civil Law member in Qatar

Leaders in Law, the leading platform in its field, is delighted to welcome Mubarak Al-Sulaiti as our exclusively recommended & endorsed Civil Law expert in Qatar. Mubarak’s office is located in Doha.

Mubarak Al-Sulaiti is the founder and Chairman of Al Sulaiti Law Firm.

If you require any assistance in this area, please use the contact details provided in Mubarak’s profile below or contact us at info@leaders-in-law.com & we will put you in touch.