Could your transaction be voided if you buy a property previously bought undervalue?

portway72

Dear All
I am in process of purchasing property from auction,  my solicitor informs me that this property previously  purchase buy seller at undervalue, so this is what happened                 the Company (A) sold property to company (B) for nil consideration (£0) and i am buying from the company (B) solicitors saying if company (A) go to bankruptcy then the trustees can set aside your transaction. I am buying from Company B with full market value through auction, I have already paid deposit to auction so if I don’t complete I will lose my deposit   can someone advise me please
i didn't get auction pack checked buy solicitor prior to auctions, and seller solicitors not responding to this queries 
Thank you

davidmcn

Yes, your solicitor is correct in saying that's a risk. The sellers don't need to respond to any enquiries, that's (partly) the point of auctions. It probably won't happen (assuming you don't have any special knowledge about the solvency of Company A). I would just buy and keep your fingers crossed.

You won't just lose your deposit if you breach the contract, you risk being sued for any greater losses if e.g. the property is resold for a lower price.

portway72

I had a following response from someone, what do you make of it. i am in big dilemma. 
Arguably it is impossible to have an auction property be reaquired by a subsequently appointed liquidator, if the auction was properly advertised tyo the public and purchased at arm’s length (without any knowledge it was sold at an undervalue).  The risk you face is that you know the property was purchased by the seller at a below market value (although the other aspect, which is slightly more suspicious, is your comments and knowledge of likely insolvency)

portway72

Thank you Davidmcm for your reply, 

HopeAndDriftWood

What’s your connection with company A? That’s the vital bit. 

AdrianC

If the owner is registered at LR as the vendor, B, I'm not sure I see how there could be any unwinding of the sale - unless there's a suggestion that you're complicit in defrauding the creditors of company A through involvement in the transfer to B.

You're just purchasing at market value from B.

Thrugelmir

An administrator or liquidator has the power to apply to apply for a court order that would reverse the transaction, so restoring the situation to what it was if the sale or transfer had not taken place. That's written into Insolvency Law to stop the sale/transfer of company assets at under value. . 

AdrianC

Thrugelmir said:

An administrator or liquidator has the power to apply to apply for a court order that would reverse the transaction, so restoring the situation to what it was if the sale or transfer had not taken place. That's written into Insolvency Law to stop the sale/transfer of company assets at under value. . 

Reverse the transaction from A to B, sure.

But the open market sale from B to the OP? Surely not unless there's strong evidence of collusion between the OP and A.

Without that evidence, it would be disproportionate for it not to simply become a question of the financial value of the transaction being due from B to A, not the reversion of the transfer.

saajan_12

I had something similar (except not at auction and with people not companies) and maybe you can try something similar
* Ask your vendor to write a statement of fact, stating they were gifted the property, name / address of the gifter
* Perform a bankruptcy / solvency search on the gifter
* Purchase indemnity insurance covering the value of the property, (that in the event that the gifter is insolvent and creditors claw back the property, you're paid out the value from the insurance)

Cost if the insurance came out ~0.1% of the purchase price. 

portway72

SaucySecrets said:

What’s your connection with company A? That’s the vital bit. 

No connection at all with company A

portway72

AdrianC said:

Thrugelmir said:

An administrator or liquidator has the power to apply to apply for a court order that would reverse the transaction, so restoring the situation to what it was if the sale or transfer had not taken place. That's written into Insolvency Law to stop the sale/transfer of company assets at under value. . 

Reverse the transaction from A to B, sure.

But the open market sale from B to the OP? Surely not unless there's strong evidence of collusion between the OP and A.

Without that evidence, it would be disproportionate for it not to simply become a question of the financial value of the transaction being due from B to A, not the reversion of the transfer.

This is the reply from vendor solicitor :  

1. What was the reason for the transfer between company A to company B at Nil consideration?  That is a matter between the partied as you will note the funds were provided by company B