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Thanks Paul

Hi Paul,

I sympathise with your situation. What I would be interested to discover is did this particular deal leave the vendor with a cash surplus from you. (excess of purchase price oversecured debts). I guess this would be true in most cases unless the situation was dire.My line of thinking would be couldn't we develop a form of contract that committed the vendor to spend the surplus he receives to paying off at least any Inland Revenue Debts. I am wondering although I have my doubts about this. If you could prove that the vendor had enough cash to pay the Inland Revenue but just went out and bought a new car, would this absolve you in some way ? Alternatively if you had known about an Inland Revenue Debt you could insist on them being paid as part of the deal. Also, did the Inland Revenue Debt exist at the time of the BMV purchase ?

Without wishing to be flipant, the best practical advice I would offer is do another BMV deal and use the cash-out to pay off this one. This will at least avoid a hole load of legal fees and agravation and allow you to move forward

 

All the best

 

Anthony

Hi Anthony,

The deal left the client with his mortgage and secured debts paid  and a small lump sum.  He had an agreement with the customs & revenue to pay off his debt at £250 per month.  However, he could stick to this agreement until the sale went through and his monthly outgoings fell.  Unfortunately HM C & R aren't very forgiving and understanding and proceeded against him immediately.  I had no way of knowing at the time that he problems that were not dealt with by this sale.  The sale proceeds would not have been sufficient to clear his debt to HM C & R but his agreement with them seemed fine and he was relieved.

Not flippant at all Anthony,  I am not going to be driven under by this claim.  My bigger concern was us all safeguarding ourselves on future deals.  Now that we aware of these possibilities we can all look at appropriate measures to strengthen our businesses.  Hopefully some good will come from it in the end and we will find a way to improve our businesses as a result.
 

I thought this link might be of interest (and to get everyone upto speed )

http://www.insolvency.gov.uk/freedomofinformation/technical/casehelpmanual/A/AntecedentRecoveries.htm

One of the bits I found interesting was that they need not prove that the vendor was insolvent at the time of the disposal if the disposal was withing 2 years of the presentation of the petition.

Very interesting article, thank you Riki.  This is far more complicated than it at first seems.  I think I will go back to the specialist solicitors for further advice before deciding on a course of action.

indeed a most interesting article which includes the following : -  

Sections 238 & 339 

 

""and it is generally necessary to show that the individual or company was insolvent at the time that the transaction occurred.""

 

""Where the transaction took place in the period of 2 to 5 years prior to the petition being presented, the bankrupt must either have been insolvent at the time or become insolvent as a result of the transaction. The burden of proof falls on the trustee to show that the bankrupt was insolvent at that time""

 

these surely are the most crucial sentences in this whole article ?

 

Pal  - how can it possibly be argued that 2 years later your guy became insolvent as a result of your transaction ?  

This is definitely something for the legal bods to argue over.  I will be handing this over to them to negotiate or fight the various points.  In my particular case the papers were served only days after the transaction completed, but the principal is the same.  In fact it could be argued that by selling to me and lowering their monthly outgoings they kept themselves solvent and able to meet their commitments to HM C & R.

My understanding is that, if the vendor has an overdraft and/or a credit card debt at the time of sale (even if he is able to make monthly payment with ease) - then this can be said, that he was insolvent at the time of the sale.

I think in this particular case the tax man has proved this?