06: Transactions that the court makes void

The trustee has a duty to creditors to increase the funds available to pay them, wherever possible, as follows:

Onerous property The trustee can disclaim 'onerous' property, eg an unprofitable contract. This ends all the bankrupt’s rights and liabilities relating to the property in question.

Transactions at undervalue where a bankrupt has made a gift, or has received much less in return for what they provided.

Preferences are arrangements between a debtor and another party that:

• Placed the other party in a better position than they would otherwise have been, or
• Fulfilled the debtor’s desire to improve the creditor’s position, eg by repaying money to a friend who would otherwise rank with unsecured creditors.

Treatment of preferences The trustee can apply to set aside a preference six months before the petition, or within two years if the preference is in respect of an associate.

Transactions defrauding creditors Where a transaction was carried out at an undervalue to make the debtor’s property unavailable to creditors, the trustee may apply to have such a transaction set aside, however long ago this happened.

A post-bankruptcy fast-track voluntary arrangement Undischarged bankrupts can appeal to their creditor for a fast-track voluntary arrangement (VA) to speed matters up. If the creditors agree, the court will annul the bankruptcy.

When must an application for revocation be made?

An application may not be made after the end of 28 days from the date when the official receiver made a report to the court that the VA had been approved by the creditors.