How far back can the OR dig?

pottermore

In preparation for bankruptcy and while filling out the Form 6.28 (Statement of affairs) I came across the following two questions:

3.5 Have you in the last five years given away, transferred or sold for less than its true value any property or possessions you owned? This includes the surrender of life, endowment and pension policies

5.4 Please list any bank, building society or National Savings accounts you hold, or have held in the last two years, including any joint, business or dormant accounts

Specifically I have one creditor who is really bitter and vengeful and might want to contest a (considerable) cash present I made to a sibling about 4 years ago (from a bank account that has been closed 3,5 years now)

My question specifically:

1) What I couldn’t find, reading through the Insolvency Act 1986 or the Technical Manual for the official receiver, where this “arbitrary” times come from. What is “reasonable” for them to ask. Where is “reasonable” from Section 291(2) defined?
2) Do I as a private person have to keep records for (closed) bank accounts older than 2 years?
3) If the creditor contacts the O.R. with those old dealings, could the O.R. possible reverse those old dealings?

TheGardener

Cant help with some of the technicalities but as someone who works in a field where the legal term 'reasonable' comes up quite often, I can tell you there is no specific definition of the term 'reasonable' it is usually for either side of the case to make the argument for or against what is 'reasonable' Black's Law Dictionary gives as a definition “Fair, proper, or moderate under the circumstances.

The OR can look as far back as they feel they need to and it doesn't matter if you have kept records (some people don't keep last months bank statement let alone 2 years worth) - the bank will have an archive record and the OR can just go straight to the bank for details.

skylight

The OR can go back as far as they like. The OR goes back, not a creditor - a creditor will not be given details of your past finances, just your current status.

As to you giving a gift some years back, you were not planning on going BR back then and I suspect were servicing your obligations nicely, so don't worry too much about it.

Action_Jackson

The OR can and will obtain bank statements from as far back as they want direct from the banks, regardless of whether you have them or not. Generally though, the 5 years will give them the full picture they need. I was just asked for 12 months worth, but my case was fairly simple.

How far they look back depends entirely on the specifics of your case. They will need to understand why you became insolvent. If an irate creditor mentions something potentially serious to them, then they are obliged to investigate - that's their job.

If they decide that you were insolvent at the time you gave that money away, there will be ramifications. Maybe just a BRU/O, or they can even demand the money back. If you think about it, giving a bunch of assets away to family then going BR, would be far too easy a way of escaping debts without paying anything back, which is why they look for such things.

Do you have to go BR now, or could you wait a year?

debt_doctor

Hi,

Transactions at undervalue (TAU)can be looked at 5 years before the BR date. Intention at the time does not matter (that is for preferences) it just requires that money / property was given away for nil or undervalue worth. You would have to show that you were not insolvent at the time.
The IS will not persue a TAU via their collector if not worth more than £5000 but will at least ask for it back from the beneficiary.

You may be wise to delay your BR.

DD

easygoingchap

Our case was straight forward but or wanted, and got, 5 yrs worth of statements.

pottermore

debt_doctor wrote: »

Transactions at undervalue (TAU)can be looked at 5 years before the BR date. Intention at the time does not matter (that is for preferences) it just requires that money / property was given away for nil or undervalue worth. You would have to show that you were not insolvent at the time.
The IS will not persue a TAU via their collector if not worth more than £5000 but will at least ask for it back from the beneficiary.

You may be wise to delay your BR.

Thanks for the quick and thorough answers, everyone! I hope to be able to give back to this community as I wouldn’t know what to do without you!

Now let us go into more detail:

The business that I was director of was founded in 2007. It went bust in August 2009 when some financing did not go through. If I remember correctly the gift was in April of 2009. I did service my private obligations until just recently (May/July 2013)

1) So cash is a possession and a gift means it is by definition TAU? To me that is not entirely clear, as they do not specifically ask for cash and a gift for years of support of a sibling means I got “value” back. It was more than £5000. I know I am splitting hairs here, but would like to hear your opinion. And what if I wait until May 2014 (more than 5 years)? If the OR still goes back farther, it doesn’t change a thing, does it?

2) In 5.4 ther form only asks for accounts 2 years back. So at the moment I haven’t filled in details of older bank accounts, only my current 3 accounts (why give more info than was asked for). I am still wondering how the OR proceeds? Will he simply contact ALL banks regardless and ask for 5 years’ worth of statements?

3) When he asks me: did you have another bank account in 2007 how would I best proceed? I really don’t have any of the old statements. I’ll even have to dig to find the account number and I don’t want to prepare all that in advance…

4) Where would I go (in London) for more advice on this? I think I can scrape together enough cash for a consultation. Do I go to a lawyer or an Insolvency Practitioner directly? Any pointers are greatly appreciated!

Thanks
pm

fermi

1. Money is defined as "property" in the Insolvency Act 1986. A gift would usually be regarded as a TUV, subject to a few caveats.

2. They decide on a case by case basis AFAIK.

3. You tell the truth and give as much detail as you do have.

Action_Jackson

pottermore wrote: »

1) So cash is a possession and a gift means it is by definition TAU? To me that is not entirely clear, as they do not specifically ask for cash and a gift for years of support of a sibling means I got “value” back. It was more than £5000. I know I am splitting hairs here, but would like to hear your opinion. And what if I wait until May 2014 (more than 5 years)? If the OR still goes back farther, it doesn’t change a thing, does it?

You should be fine after 5 years. Here are the official rules:

16. Transactions at an undervalue (bankruptcy cases) - section 339

As far as a bankrupt is concerned, the transaction at undervalue must have occurred during the 5 years prior to the presentation of the bankruptcy petition. 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.

Where the transaction involved an associate of the bankrupt, there is a presumption that the bankrupt was insolvent at the time the transaction took place so the trustee does not need to prove that the individual was insolvent. An associate can be the individual’s spouse or civil partner, or a relative or relative’s spouse or civil partner, of either the individual or the individual’s spouse or civil partner.

fermi

Action_Jackson wrote: »

Even within 5 years, if you were NOT insolvent at the time of the transfer, then you will also be ok.

You missed the next bit.

Where the transaction involved an associate of the bankrupt, there is a presumption that the bankrupt was insolvent at the time the transaction took place so the trustee does not need to prove that the individual was insolvent. An associate can be the individual’s spouse or civil partner, or a relative or relative’s spouse or civil partner, of either the individual or the individual’s spouse or civil partner.

pottermore

Wow, thanks for the digging Action Jackson. Great find.

Where would I go (in London) for more advice on this? I think I can scrape together enough cash for a consultation. Do I go to a lawyer/solicitor or an Insolvency Practitioner directly? Any pointers are greatly appreciated!

Thanks
pm