I took a client to court (Scottish) for non payment of fees and was granted a decree for payment in full plus interest until settled.
He shortly after declared himself bankrupt and a trustee was appointed. In my opinion the trustee has not been acting ethically in the best interest of the creditors, has undervalued the marital home, and stated he will allow a claim for expenses made by the wife, without proof and even stating that he is unsure if they are valid.
However, I would appreciate advice on the legality and ethics of the statement below. It is my understanding that he acts on behalf of the creditors, not the bankrupt, and cannot decide to accept an offer which is certainly not in the interests of the creditors.
You have stated that it should not be within xxxxx’s remit to accept the offer of £nnnnn.00 for the property. As xxxxx was appointed Trustee, he will make the decision on all aspects of the bankruptcy, including the offer submitted by Mrs yyyyyy. Bbbbbbb cannot change a Trustee’s decision on a specific matter within their administration of a bankruptcy
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Valuation of marital home
Bear in mind that owning 50% of a home does not necessarily translate into a valuation of half of its full open market value. Typically such valuations are then reduced for lack of saleability of a half share in the open market (in other circumstances somewhere in HMRC's manuals it suggests 10% discount).
If the wife makes a reasonable offer to buy the other half share reflecting this point then the trustee would be quite sensible to accept it. I do not think that a trustee who did that was failing to act in the interests of the creditors. The wife could dig her toes in refuse to move out and the trustee could incur further expense trying to resolve the matter.
Costs in selling to a third party
There is precious little in personal insolvency that is more contentious, or has more aspects to it, than dealing with a bankrupt's home.
You are speaking to the IP's RPB - I hope they give you a good steer on matters, as they should. I would also suggest speaking to a solicitor well versed in sequestrations, as the actual process itself will allow the chance for objections to be made in court to the Trustee's decisions, if you are absolutely sure that he is not acting the creditors' best interests.
One thing I would point out (which may or may not be relevent, given we don't have all the details) is that the costs that would be incurred by the Trustee in getting the right to sell the property to you or any other third party are potentially very significant. If the wife does not consent to the sale (which would appear unlikely in the circumstances as described), the Trustee would have to go to court to to raise an action of Division and Sale. The court will take into account many factors, including whether there are any kids living in the property and the impact on them of effectively made homeless. The legal costs in such an action can run into thousands very easily, and so the Trustee won't just be comparing your offer against the wife's offer on a £:£ basis.
All of the above being said, the point of the sequestration process is to get available funds back to the creditors - no argument.
If you'd like to discuss a little further off-line, feel free to drop me a PM.
This is a complex area
The Trustee's response, which you quoted above, is entirely correct. The Trustee must decide on the sale - that's his role. However he does have a duty to maximise the outcome for creditors. In doing so he will need to balance what he can obtain from the wife vs what might be obtained through taking steps to evict the family and sell the house. He should have obtained a valuation of the property from an agent, and will take into account the outstanding mortgage on the property. Don't forget that the value of the bankrupt's interest in the house is generally 50% of the net amount after deducting the outstanding mortgage.
I would suggest you ask him what steps he has taken to ascertain the value of the property on an open market basis. If you do not get a satisfactory response, then complaining to the RPB is available to you.
There are a range of other complex considerations, including equitable exoneration, equitable accounting, principles of resulting and constructive trusts, "exceptional circumstances" of the family etc. which may affect the value of the Trustee's interest in the house. The claim for expenses you cited is likely to be an "equitable accounting" claim, as spouse's creditor claims are usually treated as subordinated to third party creditors.
There are also provisions under the Insolvency Rules to challenge a Trustee's decisions, but this would incur legal fees.