HCR Law Events

28 August 2020

Realising the trustees interest in residential property

The stay on the commencement, continuation and/or the enforcement of possession proceedings has been extended for a period of four weeks until 20 September 2020. What does this mean for trustees in a bankruptcy situation?

Background

During the pandemic, temporary changes were brought in by the government pursuant to PD 51Z of the Civil Procedure Rules 1998 (“CPR”) to stay possession proceedings. This was then extended to 23 August 2020, but on 22 August, the stay was extended even further. This amounts to a ban on evictions.

What’s the current situation? 

  1. A trustee in bankruptcy cannot commence, proceed with and/or enforce any order for possession and sale of a debtor’s property;
  2. Rule 55.29(3) provides that paragraph (1) (i.e. staying all proceedings brought under Part 55 until 20 September 2020) does not prevent the bringing of a claim notwithstanding that it may be stayed. This circumvents any limitation issues for trustee’s in bankruptcy in the ‘use it or lose it’ provisions in section 283A of the Insolvency Act 1986;
  3. Any proceedings that have already been started remain automatically stayed, even those which are the subject of an appeal (per Arkin v Marshall [2020]; Hackney v Okoro [2020]). Furthermore, before trustees in bankruptcy can recommence their possession proceedings, a reactivation notice will have to be served pursuant to Part 55C CPR;
  4. There appears to be nothing to prevent a trustee in bankruptcy from proceeding with an application for a declaration in relation to establishing the extent and/or value of his interest in a property, as vested in him. However, what the trustee cannot currently do is then enforce it.

More generally, it will be interesting to see what the effect of the stay being lifted – when that happens – will have on the courts and their resources, not only in processing applications and the hearing of them, but also their enforcement together with the resources of the court bailiffs to undertake the same. In relation to the property market generally, received wisdom is that there is and remains a pent up demand for properties and the increase (albeit also temporary) in the Stamp Duty threshold is only adding to this demand.

If you or your team have any queries, please do not hesitate to contact our restructuring and insolvency team.

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About the Author
Alan Meiklejohn, Partner

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