Gwilym Jones
About Author
July 8, 2021

What to do when trusts are untrustworthy

Henderson & Jones has recently taken control over a number of significant property assets for the benefit of bankruptcy estates. In these cases the bankrupt (and certain connected parties) had asserted that the properties were held on trust  which had prevented the trustees from realising them through the normal routes.

H&J conducted detailed investigations into the circumstances surrounding the creation of the purported trusts and identified compelling evidence that the trusts were in fact a sham designed to unlawfully prevent the properties from falling into the bankruptcy estate. In one of these cases, there was (apparently) no original of the trust deed. A copy was made available and purported to be dated many years prior to the bankruptcy. The document, however, had a number of unusual features which were forensically investigated - including conducting detailed handwriting analysis and investigating and making enquiries of the apparent witness to the trust deed.  We made an application to Court for a declaration that the trust was a sham and for possession and sale of the properties. It proved crucial in this case that the defendants were apparently unwilling to risk perjuring themselves by providing a witness statement accompanied by a statement of truth supporting the trust deed. The defendants therefore sought to delay provision of their formal evidence for as long as possible. This weakness ultimately enabled a swift outcome to the case without a hearing being required. The settlement is expected to realise hundreds of thousands of pounds for the benefit of the bankruptcy estate when the properties are sold.

In these cases H&J did not take assignment of officeholder claims from the trustee in bankruptcy (which are not covered by the Small Business, Enterprise and Employment Act 2015 insolvency reforms). Instead, H&J purchased the trustee's interest in the properties. The applications mentioned above were then jointly sought by H&J and the trustee (importantly H&J met the legal costs of these applications and provided the trustees and the estates with an indemnity to protect against any liabilities arising from them).

This innovative approach to assignments is just one example of the many tools H&J can offer to help office holders to realise value from difficult assets which are protected under purported trusts or other claims.

More Posts

You Might Also Like

Read More
News / Press Releases

H&J secures recovery of £7m for victims of fraud

H&J has secured the recovery of more than £7m for victims of fraud pursuant to a judgment handed down on 5 January 2024.
Feb 1, 2024
Piers Elliott
Read More
News / Press Releases

Daren Hlaing joins H&J as Legal Director

Daren Hlaing has joined H&J as a Legal Director in our London Office. Daren specialises in insolvency, financial services and professional negligence claims.
Jan 25, 2024
Gwilym Jones
Read More
News / Press Releases

Piers Elliott promoted to Managing Director

We are delighted to announce the promotion of Piers Elliott to Managing Director.
Jan 1, 2024
Philip Henderson