Director Disqualification and Bankruptcy Restriction Undertakings

A Bankrupt Solicitor Can Run but He Can’t Hide…………His Assets

This article examines the bankruptcy of Mr Philip Shiner (‘Mr Shiner’), a former solicitor who made himself bankrupt in March 2017 after being struck off the roll of Solicitors for making fictitious claims against the Ministry of Justice. He has now accepted a Bankruptcy Restriction Undertaking, which includes Director Disqualification, and his attempts to hide his assets from the Official Receiver have been reversed on application by his Trustee in Bankruptcy to the Court.  This demonstrates the severe penalties that the Official Receiver is able to impose for those who try to hide their assets at or about the time of insolvency or bankruptcy.

Details of this Case

Mr Shiner has recently had his Bankruptcy Restrictions extended for six years for ‘unacceptable behaviour’. The main issue the Official Receiver had (as the Trustee in Bankruptcy) was that in the six months leading up to his bankruptcy, Mr Shiner entered into several questionable transactions to put his assets out of the reach of his creditors.

These included:

  • selling a £245,000 commercial property and having the proceeds of sale paid to his law firm; and
  • placing his home which was worth £300,000 (mortgage free) on trust for his family.

These are just two examples of transactions which have been reversed by the Official Receiver which has resulted in a recovery of £483,583, for the benefit of his Bankruptcy Estate.  This amount includes setting aside the Trust on Mr Shiner’s home.

Mr Shiner has Accepted a Bankruptcy Undertaking, Which Included Director Disqualification

The Bankruptcy Restriction Undertaking not only extends the restrictions placed upon him by his bankruptcy for a period of six years, but extends to include his being prohibited from acting as a Director and from managing or controlling a company without leave of the Court – Director Disqualification.

When and Why Will the Official Receiver Take This Action?

Typically, and as appears to be the case here, the Official Receiver will only seek a Bankruptcy Restriction Order from the Court where they find a bankrupt to be blameworthy in some other way.

The Official Receiver may also accept a Bankruptcy Restriction Undertaking which has the same effect as a Bankruptcy Restriction Order but without the need for a formal Court hearing.

This Mr Shiner case highlights two important points of bankruptcy procedure.

  • Firstly, that attempts to improperly place assets outside of the reach of creditors will often be met with a robust challenge from the Official Receiver or a Trustee in Bankruptcy. Just because assets have been placed in trust and money is not immediately traceable does not mean it will not be recovered. NDP has extensive experience of successfully pursuing such applications for Trustees in Bankruptcy. Indeed, we here at NDP have in the recent past obtained Orders from the High Court, on behalf of Trustee in Bankruptcy clients, setting aside sham Trust and returning assets to the Bankrupt’s Estate, for distribution to his Creditors.
  • Secondly, and perhaps more importantly, this case shows that there can be severe consequences for ‘trying it on’ which can include a very significant extension to the Bankruptcy Restriction period, to include Director Disqualification, or an indefinite suspension of that period where a Bankrupt fails to cooperate.

These points are perhaps summed up best in the words of Mr Shiner’s Official Receiver who stated:

“Sadly [Mr Shiner] was mistaken as all his activities were easily spotted and we have since been able to recover a substantial amount of money, even if it was in his family’s name.

 Mr Shiner’s activities should serve as a lesson and act as a deterrent to him and others from acting in the same way.’”

Our Experienced Insolvency Solicitors can Help

If you are a Bankrupt being threatened with an Income Payment Order, or an Insolvency Practitioner looking to recover assets, please contact us or call us on 0121 200 7040 for a free no obligation consultation today.

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *