Hundreds of distressed borrowers — including businessman Bill Cullen (above) — have ploughed their assets into a single private trust in a bid to prevent lenders repossessing their properties.
Land and buildings belonging to at least 600 developers, businessmen, and farmers have all been put into this trust since word about it began to spread late last year.
They are hoping the courts and lenders will be unable to get at the assets because of the ancient and complex trust laws.
Debtors protect assets in private trust (Vincent Ryan and Conor Ryan, Irish Examiner)
Is this kosher?
Legal Coffee Drinker writes:
Under Section 59 of the Bankruptcy Act 1988, the trustee on bankruptcy has power to unwind certain earlier transactions by the bankrupt in order to recover assets for the estate.
The transactions which may be set aside are transactions made by the bankrupt as a gift or at an undervalue. These would include payments or transfers into trusts (including family trusts)
All such transactions made within the two years prior to the bankruptcy can be set aside.
They can also be set aside if made between two and five years prior to the bankruptcy petition, where the bankrupt was insolvent at the time of making them. Insolvent means unable to pay his debts.
The two year period in Section 59 is to be extended to three years by the new Personal Insolvency Bill.
In addition, and irrespective of any bankruptcy order, under Section 74 (3) of the Land and Conveyancing Law Reform Act 2009, any conveyance of land made with the intention of defrauding a creditor (i.e. avoiding paying a debt to that creditor) may be set aside by the creditor on application to the court.
So if land has been transferred into a family trust in a situation where there are substantial creditors, the creditor may apply under Section 74(3) to have the transfer set aside even where the debtor has not been declared bankrupt.
(Leon Farrell/Photocall Ireland)
