Gratuitous Alienation

debtfreehopeful99

Hello all. I am looking at going bankrupt but there is a potential barrier stopping me. I made a large payment last year to my ex as part of our separation (I have the official minutes of agreement detailing the payment). Unfortunately, this payment could be potentially seen as a gratuitous alienation.


To disprove this alienation, I need to prove I was solvent the day immediately after the payment was made. I can demonstrate this but there is one potential fly in the ointment. I am a company director and the company owed me money at that time. However, critically, the business itself was insolvent at the time.


I have two people (my own accountant and one IP) telling me that the director's loan was indeed an asset, regardless of whether the company was solvent or not. I also have one IP who says it can’t be regarded as an asset due to the company’s insolvency.


This is of absolutely critical importance to me because the amount owed to me by the business is enough to tip the balance between me being insolvent or not on the date in question. It would be catastrophic if I entered bankruptcy and then for it to be ruled that the transaction was indeed seen as an alienation.


Hence, I’m looking for some qualified opinion here. If I don’t have 100% confidence that it wouldn’t be seen as an alienation then I just won’t go down the path of b/r and would have to find some other way.


FYI, I am in Scotland but don’t think that makes any difference with this specific point. Also, I’m sure a few will advise that I see a lawyer. I absolutely will be doing this at some point but just wanted a quick ‘heads up’ if anyone can help. Thanks in advance.

debt_doctor

Hi,
I can't comment on Scottish law, but in England a financial decision taken in the family court stands firm against any subsequent bankruptcy providing that there was no collusion between the parties and the court was made aware of all the facts regarding the solvency of the parties.
If the family court decision does not stand up to this scrutiny then a future OR / IP could attempt to overturn any transaction that put any creditor at a disadvantage.
DD

debtfreehopeful99

Thanks, DD. The payment wasn't made as a result of a decision by a family court. It was simply the amount agreed between my ex and I and then the entire minutes of agreement lodged with the Registers of Scotland by our lawyers. The paragraph detailing the payment was only a small part of the overall document.

Therefore, I expect that the OR/IP would still look at exploring a gratuitous alienation and it would be my burden to prove it wasn't. This goes back to my original question. If the money owed to me by the business is indeed a legitimate asset then I was solvent after the transaction meaning that it wasn't a gratuitous alienation.

Can a loan from a company/entity/person be counted as an asset when the debtor, at that point in time, is unable to repay it?

debt_doctor

I see, then certainly if this transaction was less than 5 years ago then any trustee would certainly give it close scrutiny.
The two tests of insolvency are 'unable to pay your debts as they fall due / your liabilities outweigh your assets.'
My own personal view of an asset is it is something that can be turned in to a cash value. If the loan was unable to be paid out then I can't see how it could be turned in to a cash value.
DD