Bankruptcy - shareholding in privately held company

jrd

Any ideas what happens in the following situation?

If someone is declared bankrupt when holding a significant stake in a private company, and is a director of the company, what happens to the shareholding?

Does the receiver sell the stake to the highest bidder at the earliest opportunity in order to pay off the creditors?

The company stake in question is worth circa £5m, whilst the person seeking the bankruptcy is owed in the region of £500,000; no idea what other creditors exist.

Say the overall position is £1m. Is the OR's job literally to ensure the creditors are satisfied? So, the stake could be sold for say £1m, or only 20% of its value, which would be enough to satisfy all creditors but leave the bankruptee with nothing?

Thanks in advance for any advice/info.

debtinfo

Hi the trustee would seek to sell any assets for its true worth, now obviously the trustee will not want it to drag on and on and cant wait forever and a rushed sale can lead to a slight reduction in the price. Not forgetting that many directors do over value their own companies. In some cases the trustee may seek an independant valuation.

Another thing to consider is that the Articles of the comapny may set out how the shares can be sold (a common one might be to offer to other shareholders first) and the trustee must abide by those terms if their are any so i would think that would be the first place to have a read off