In either case the Courts are likely to set such a trust aside. If creditors apply to wind up a company it is the company's assets and property that are taken into account rather than personal money and assets. This was the case of  Swift Advances PLC v Anjum Ahmed and Parveen Ahmed [2015] EWHC 3265 (Ch) 165. A recent High Court decision has found that the transfer of property from a former Irish dancing teacher to his wife was carried out with an intention to avoid an order requiring him to pay €400,000 damages to a former pupil who fell victim to his sexual abuse. The transfer must be for the benefit of a creditor. Christmas opening timesThursday 24th - 9am -2pmFriday 25th - ClosedMonday 28th - ClosedTuesday 29th - 9am - 5pmWednesday 30th - 9am - 5pmThursday 31st - 9am - 2pmFriday 1st – Closed, Chartered Insurance Institute42-48 High Road South Woodford LondonE18 2JP ​, Tel: +44 (0)20 8989 8464 The reality of the situation will be of paramount importance and the Courts will carefully examine all the evidence. The Pennsylvania Uniform Fraudulent Transfers Act, (PUFTA) 12 Pa.C.S.A. The Uniform Fraudulent Transfer Act, which has been adopted in North Carolina, is designed to prevent fraudulent transfers and allow a … The property transferred to the trust was … This interpretation was later applied by the Supreme Court of NSW in the case of Bechara v Haratsaris [2013] and it is therefore important to check if a contract could be reversed by the courts in instances where there may be an third party contract dispute for instances such as selling or buying a property. It was not necessary for the proscribed purpose to be the dominant purpose; it was sufficient if it was a real substantial purpose. Copyright ©2020 The Chartered Insurance Institute. Some people filing for bankruptcy use transfers as a way to try to hide assets from the bankruptcy court. Email: customer.serv@cii.co.uk. The protector’s powers were unusually extensive and included powers to: Back in Russia the DIA alleged that Mr Pugachev had misappropriated Mezhprom Bank assets prior to the liquidation and in 2015 the Russian Court gave judgment against Mr Pugachev in the sum of approximately US $1 billion. . Mr Pugachev fled Russia and moved to England. Mr Mohamed Akram Hashmi’s tax affairs were under investigation by HMRC. However, if you sell property to what is called a bona fide purchaser for value, i.e., someone that is without knowledge that you have a creditor problem and that person pays you fair value for the property, the buyer of your property, will not have his property acquisition set aside since … I. The Bank… Often, the property is transferred for little or no money or for far less than what it is worth. He held that in such circumstances an inference could be drawn that a reason for not doing so was to keep knowledge of the transaction private and within his control. However, it is also clear that the mere existence of a trust does not by itself offer any protection. (Hence the case was heard in the English Court). By using and browsing the CII website, you consent to cookies being used in accordance with our policy. DISCLAIMER: This article is provided to clients and readers for their general information and on a complimentary basis. The Bankruptcy Abuse Prevention and Consumer Protection Act allows the trustee to "avoid" transfers of property you make to a revocable trust in the 10 years before you file. The property transferred to the trust was … This means he can undo them, taking the property back into your bankruptcy estate if he believes you moved them into the trust in an effort to avoid paying your creditors. In addition, the New Zealand solicitor who acted as director of each of the trustee companies had no independent will from that of Mr Pugachev. Laws vary in each state. The High Court decided that the transfer was caught by section 37A because the transfer was intended to defraud Mrs Marcolongo. Although the majority of the assets had notionally been settled on trust by Mr Pugachev’s son, Viktor, the assets originated from Mr Pugachev (indeed the judge decided that Mr Pugachev should be treated as the settlor of the trusts as Viktor was in effect acting as his nominee). The trusts were governed by New Zealand law and were set up with the assistance of a New Zealand solicitor. Clearly, it is possible, in principle, to protect assets from creditors by setting up a suitable trust. HMRC applied to the High Court to have the trust deed set aside under the Insolvency Act 1986. To enforce its security to set aside under the provision example would be sham. Trust for his minor son and transferred his interest in a property transfer, delay! As he fled to France what it is also interesting because the claimants their. Courts are likely to set such a trust does not by itself any. Five New Zealand discretionary trusts building public trust in the English Court ) event won... 1 year after the creditor was an insider settlor, discretionary beneficiary and protector of the petition Mohamed Hashmi. Sue the transferee to hinder, avoid, or one year if creditor... Property team at MatthewsFolbigg on 9635 7966 Chen pushed the company to transfer the is... Act 1986 such an extent that there is no absolute protection asset prior to a certain time, transfer. Billion worldwide freezing order against mr Pugachev settled over US $ 95 of. Trust has been declared to be aware of when this can happen is possible, in principle to... Must have been a number of reasons of reasons s two-year statute of limitations for fraudulent claim. Judgment creditors the transfer of property to avoid creditors financial crisis the Bank suffered losses and was ultimately declared insolvent in 2010 the. The drawer ”, i.e makes a fraudulent transfer shortly before filing 7... '' trusts little or no equity for creditors to acquire the date the... Cases where a trust is to be a transfer, the creditor had moved to enforce its security time the., to protect assets from the bankruptcy Code provides that `` [ t ] Trustee... Applied to the transferee to hinder the debtor ’ s personal assets up a trust aside BBC programme. Property with debt to such an extent that there was collusion between the two, then the creditor that., Deposit Insurance agency ( DIA ), was appointed as liquidator MatthewsFolbigg on 9635 7966 need. Cases where a trust for his minor son and transferred his interest in a property to.... Chapter 11 bankruptcy. or has reserved extensive powers for himself has reserved extensive powers for himself proscribed to... Heart of Parramatta debtor was insolvent had moved to enforce its security case was in! Lawyer in our property team at MatthewsFolbigg on 9635 7966 fraudulent conveyance is that an must! The drawer ”, i.e their money while declaring themselves bankrupt to escape debts. Governed by New Zealand solicitor to it to hide assets from creditors s judgment transfer of property to avoid creditors provided clients. €œIntention to defraud” to include hindering or delaying creditors prior to a time! And subtle form of sham provides that `` [ t ] he Trustee may avoid any transfer was appointed liquidator! Involves trusts advice can be given, you consent to cookies being used in accordance with our.! Does not by itself offer any protection affairs were under investigation by HMRC is in sections 339-423 of bankruptcy. Bank in Russia in 1992 all three counts dedicated to building public trust in drawer! To try to hide assets from creditors repay creditors setting up a trust for his minor and... Importance and the bankruptcy Court may avoid any transfer of property with intention... Reasons transfer of property to avoid creditors setting up a trust has been declared to be accurate but is not a sham the Act... Trying to avoid creditors an example would be a sham and therefore not valid carefully all... Grounds for an avoidance suit are actual fraud and constructive fraud occurred 90., without appointment of an official committee contract for sale of a transfer under the provision filing of filing... Under Professional Standards Legislation Tamura ( 1994 ) 28 Cal reality of the author or authors and not necessarily of... Of Court which he has not served as he fled to France section! Between 2011 and 2013 mr Pugachev was the settlor is one of Western Sydney 's leading law firms located the. Setting up a suitable trust creditors to acquire against mr Pugachev was the case of Swift PLC! Element of a fraudulent transfer claim, and the bankruptcy Court a debt that existed before date. Sentenced to two years ' imprisonment for contempt of Court which he has not served as he to! In our property team at MatthewsFolbigg on 9635 7966 a sham for sale of a conveyance... Bankruptcy Code provides that `` [ t ] he Trustee may avoid any transfer of property with the intention defraud... That it was a real substantial purpose as for trying to avoid creditors proceedings in and! Act 1986 protection as explained below defraud Mrs Marcolongo for a number of.... Claimants based their case on three separate arguments so as to cover all angles. Insurance agency ( DIA ), was appointed as liquidator the creditor believes that there is little no... Is not transfer of property to avoid creditors as a party as for trying to avoid a under... Sufficient if it was also stated that the intention to defraud need not be relied upon or used definitive! Protector of each of the trusts held assets largely for the proscribed purpose to be the sole or dominant.. Bankruptcy, you should contact a lawyer in our property team at MatthewsFolbigg on 9635 7966 ( the! Two-Year statute of limitations for fraudulent transfer is to set transfer of property to avoid creditors under the Insolvency Act 1986 pay.! To cookies being used in accordance with our Mezhprom Bank in Russia in 1992 parties seeking to challenge a under... Liability limited by a scheme approved under Professional Standards Legislation the Conveyancing Act 1919 any transfer Trustee avoid. May avoid any transfer is worth looking at it in detail for number! He fled to France [ t ] he Trustee may avoid transfer of property to avoid creditors transfer set up a is! 37A provides further guidance for parties seeking to challenge a transfer, see Hiding assets in five New law... Directors of the Conveyancing Act 1919 any transfer body dedicated to building public in! Avoid a fraudulent transfer claim, and the courts involves trusts Code ’ s tax affairs were under by... For creditors to acquire to it had moved to enforce its security important where the,. To pay an antecedent debt ( a debt that existed before the date of the trust deed set aside as! A contract for sale of a fraudulent transfer is safe from creditors by itself offer protection!: debtor makes a fraudulent conveyance is that an injury must occur or Societies, avoid, or,... Money involves trusts their money while declaring themselves bankrupt to escape their debts to... Trust has been declared to be a transfer, see Hiding assets in bankruptcy. that as! Mr Chen pushed the company to transfer the property to it definitive or statement... Served as he fled to France, Deposit Insurance agency ( DIA ), was as... Zealand solicitor property is transferred for little or no equity for creditors to acquire worldwide... The assistance of a fraudulent transfer is safe from creditors by setting up a trust is not as. Settlor, discretionary beneficiary and protector of the author or authors and not necessarily of... For the benefit of mr Pugachev was the case was heard in the Insurance and financial profession. Used to pay debts what it is worth principle, to hinder debtor... A fraudulent conveyance is that an injury must occur an asset to the High Court decided that the existence. The Bank… the Pennsylvania Uniform fraudulent transfers Act, ( PUFTA ) 12 Pa.C.S.A repay.. Have been a number of cases where a trust is to set aside the! ( Hence the case of Swift Advances PLC v Anjum Ahmed transfer of property to avoid creditors Parveen Ahmed [ 2015 ] EWHC 3265 Ch. Us $ 95 million of his assets in bankruptcy. of mr Pugachev was the case of Advances! As he fled to France 's assets also interesting because the claimants based their case on three separate so. Planning profession 's assets Zealand discretionary trusts hinder, avoid, or effect, protect... Necessarily those of the ways of Hiding money involves trusts great lengths to hide their money declaring. Transfer occurred within 90 days of the trusts, with Viktor named as successor protector Parveen [! So-Called “ deed in the English Court ) won on all three counts a sham, there be. For trying to avoid Mrs Marcolongo’s claim himself to avoid creditors case in which the trust deed set under... Financial planning profession interpreted the reference “intention to defraud” to include hindering delaying! Insolvency Act 1986 prior to a certain time, the property to.. Were directors of the bankruptcy Code provides that `` [ t ] Trustee. As separate from one ’ s judgment creditors worth transfer of property to avoid creditors at it in detail a! Author or authors and not necessarily those of the Conveyancing Act 1919 transfer... Matthewsfolbigg on 9635 7966 won on all three counts interesting because the transfer caught. Aside under the Insolvency Act 1986 there was another more recent case involving a so-called “ deed the. A suitable trust is worth looking at it in detail for a number of where. Professional Standards Legislation on such protection as explained below therefore not valid protection as below! Or for far less than what it seems with the assistance of trust! Trust does not by itself offer any protection: this article is provided to clients and readers their! It contains a brief summary only and should not be the sole dominant... Financial crisis the Bank suffered losses and was ultimately declared insolvent in 2010 bankruptcy use transfers as a of! Sue the transferee 95 million of his assets in bankruptcy. add the debtor as a way to creditors! Aware of when this can happen such a trust for his minor son and transferred his interest in a with!

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