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tobi9
Starting Member
5 Posts |
 Posted - 14 March 2011 : 21:47:01
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Hello
I have registered a 2nd charge on my business partners property (behind his bank mortgage). He has recently filed for bankruptcy but is anticipating an early discharge (i.e. after 6 months). I am now considering forcing a sale of the property although the property is in a negative equity position.
If I exercise my charge whilst he is bankrupt, and then force a sale of the property AFTER he has been discharged from bankruptcy,
1) Will I be allowed to purchase the property after settling with the first bank mortgage?
2) Will my business partner be liable to me for any shortfall (assuming the property is actually sold AFTER he has been discharged from bankruptcy) or will the Insolvency Service treat the shortfall as unsecured debt and write it off?
Thanks |
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debtinfo
forum expert
2826 Posts |
Posted - 14 March 2011 : 21:58:29
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not sure about first one (surely that would be a conflict of interest
2) any shortfall will be a debt in the bankruptcy and no longer owed to you |
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Bigal4787
forum expert
United Kingdom
641 Posts |
Posted - 14 March 2011 : 23:44:56
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Hi,
Is the 2nd charge interim or final?
Is your business partners property jointly or solely owned?
How recently did your business partner declare himself bankrupt, and has he been interviewed yet?
Big Al
Insolvency examiner with the Insolvency service from April 2008 - July 2010.
If you need help completing SOA's(statement of affairs) or PIQ's(preliminary information questionnaire) if you've been declared bankrupt, or anything else and you're within 30 miles or so of Warrington, then please contact me via my contact details in the expert page for futher details"
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tobi9
Starting Member
5 Posts |
Posted - 15 March 2011 : 08:21:14
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Hello
Thank you for your posts.
I don't know if my second charge is interim or final. How can I find out?
The property is solely owned by himself.
He declared himself bankrupt in November.
I don't think he has been interviewed in person, he has only been interviewed over the telephone.
Thanks |
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Bigal4787
forum expert
United Kingdom
641 Posts |
Posted - 15 March 2011 : 15:52:12
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Hi,
when the court granted the charging order, it would be on the order, of which you should have a copy, plus your business partner.
The other way, is to check the property on land registry, which will show on it what charges are held against the property.
The reason I asked about those questions,is that
First: If your charge was an interim one at the time of bankruptcy, then it will revert to an unsecured liability, and the court will dismiss it. If it was a final charge at the time of bankruptcy, then it still stands as a charge on the property.
Second: As your business partner has now been interviewed, the OR will have been appointed as trustee of the bankruptcy estate, including the property,thus my question about being a sole or joint owner.
If it had been jointly owned, then the OR would have been trustee of the beneficial interest only, as a joint legal title cannot be seperated,whereas the beneficial interest can. You could have purchased the beneficial interest( being in negative equity, that would be about £750 - 1,000), and the property vested back to your business partner. But, as the property is solely owned, both the legal title and beneficial interest vest with the OR as trustee, and it vests with the trustee for 3 years.
The beneficial interest can still be purchased, but it is more involved, due to the title being vested with the trustee.
Big Al
Insolvency examiner with the Insolvency service from April 2008 - July 2010.
If you need help completing SOA's(statement of affairs) or PIQ's(preliminary information questionnaire) if you've been declared bankrupt, or anything else and you're within 30 miles or so of Warrington, then please contact me via my contact details in the expert page for futher details"
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tobi9
Starting Member
5 Posts |
Posted - 15 March 2011 : 16:55:19
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Hello Big Al
Thank you very much for your posts which are very helpful. If I lived anywhere near Warrington, I would make an appointment and visit you!
I am waiting to see my solicitor (hopefully next week) but my charge must be final as he told me a while ago it is secured.
Yes I understand the OR is now the trustee.
My 3 questions are:
Does this mean that I can or cannot force a sale and purchase the property for myself?
If I force a sale while the OR has a vested interest in the property, then would any shortfal (negative equity) be written off?
Would the OR consider allowing the property to be let once my business partner has been discharged?
Thank you.
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Bigal4787
forum expert
United Kingdom
641 Posts |
Posted - 17 March 2011 : 14:37:41
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Hi,
I imagine you could force a sale, but the main chargeholder would have to be consulted before doing so, and the OR as trustee kept informed, who would insist that the transaction was completed as it were at arms length, to ensure that the property wasn't being sold at an undervalue. However, the benefit of a forced sale would be that any shortfall would be claimed in bankruptcy.
Once the property has been sold/dealt with and your business partner is no longer the sole proprietor, then the OR would have no further interest in it, unless any suggestion of a TUV(transaction at an undervalue) arose, in which case your business partner could be investigated further, with a view to imposing a BRO(bankruptcy restriction order).
As for letting, if your business partner remained the owner, the OR would not agree to the property being let, if it isn't being let already, as there are seperate rules that govern properties that are tenanted at the point of bankruptcy.
Big Al
Insolvency examiner with the Insolvency service from April 2008 - July 2010.
If you need help completing SOA's(statement of affairs) or PIQ's(preliminary information questionnaire) if you've been declared bankrupt, or anything else and you're within 30 miles or so of Warrington, then please contact me via my contact details in the expert page for futher details"
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tobi9
Starting Member
5 Posts |
Posted - 22 March 2011 : 05:51:06
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Hello Big Al,
Thank you for your latest post.
One last question please.
I think I would like to explore purchasing the property (if I can afford to).
Do you know if I can just make contact with the mortgage bank and agree to settle the outstanding mortgage with them, providing I keep the OR informed?
Regards
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Bigal4787
forum expert
United Kingdom
641 Posts |
Posted - 22 March 2011 : 23:58:40
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Hi,
It just depends at what stage the mortgagee is at, i.e. started legal proceedings for possession etc. You can make contact with the mortgagee to make an offer, but you would have to declare your relationship to the bankrupt, as the mortgagee would be duty bound to inform the OR of this, as if he remains your business partner, and you purchase it, he could still benefit from it, this isn't what I'd call a transaction at arms length.
Big Al
Insolvency examiner with the Insolvency service from April 2008 - July 2010.
If you need help completing SOA's(statement of affairs) or PIQ's(preliminary information questionnaire) if you've been declared bankrupt, or anything else and you're within 30 miles or so of Warrington, then please contact me via my contact details in the expert page for futher details"
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tobi9
Starting Member
5 Posts |
Posted - 23 March 2011 : 06:55:52
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Big Al,
Thank you again for your help.
Regards |
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Forced Sale Queries
