A real dilemna ..... Bankruptcy looms.

tempsc

Hello. I hope someone may be able to assist or at least signpost where we may be able to get the best advice so please don't judge us.

My wife and a family member bought a property some years ago. The purchase was made via a ltd company with a 50/50 shares split. All was well until the family member informed my wife that his business was almost certain to go bankrupt. Although sad for the family member we weren't too worried about the property as it was held within an unconnected, separate company apart from the 2 x directors being my wife and the other family member.

More recently though the family member has informed my wife that he is likely to be made personally bankrupt too and my wife is concerned that this has wider implications for her as co-director. Do we understand correctly that the 50% share of the property could be 'taken' by the reciever whilst my wife would retain her 50%? Can she be forced to sell by the reciever? Are there any viable solutions?

Obviously, we need some serious professional legal/accountancy advice on the situation but we would like to have a better awareness of the choices and consideratons at hand and the potential outcomes that would need to be considered prior to making any legal/accountancy appointments so that she can quickly get the clarity she needs.

Thank you.

ManyWays

Call your wife's family member X.
Obviously these comments are made without any knowledge of X's overall situation, so they are based on bankruptcy generalities.
and I have assume she and X own the property 50/50.

Do we understand correctly that the 50% share of the property could be 'taken' by the reciever whilst my wife would retain her 50%?
Yes, the assets X has (excluding personal and household goods like clothes, everyday furniture and good with a second hand value of less than £500) become the property of the Official Receiver

Can she be forced to sell by the reciever? Are there any viable solutions?
If this is a BTL (so neither X not your family are living in it), then the OR would usually ask your wife if she can buy out X's equity in the property.
An example: If the property is worth 200,000 (take the price for a quickish sale) and the mortgage is 120,000, then X's share of the equity would be about 40,000

If she can not buy X's share back (or does not want to), she can offer to sell the property.
If she does not do that, the OR can force a sale and may get a less good price.

When the property is sold, after expenses and clearing the mortgage, the OR keeps X's half of the remining money and your wife gets her half.

So her options are probably to raise the money to buy out X's share, which includes taking on the full BTL mortgage, or to sell the property herself.

MEM62

An example: If the property is worth 200,000 (take the price for a quickish sale) and the mortgage is 120,000, then X's share of the equity would be about 40,000

Although the OR will probably accept an offer considerably less than that as, if they had to force a sale, the value they realised from the sale would be less in addition to which they would have considerable legal fees.

One other interesting point is that technically the OR would have an interest in 50% of the Ltd company - not 50% of the house. I would be interested in what our more knowledgeable contributors view is on that.