In a recent High Court decision, a bank (B) applied to appoint liquidators to the TPS Asset Trust and TPS Asset No2 Trust (Trusts). The defendants had guaranteed loans borrowed from B by their company, both personally and in their capacity as trustees of the Trusts.
The defendants had been found guilty of fraud, tax evasion and attempting to pervert the course of justice in August 2012. In July 2012 the defendants had also been adjudicated bankrupt and their company had been placed in liquidation.
Under the Insolvency Act 2006, the Official Assignee cannot access property held by a bankrupt as a trustee, therefore B applied for liquidators to be appointed to the Trusts under section 17A Judicature Act 1908. Section 17A gives the Court jurisdiction to appoint a liquidator to an association, including an unincorporated body of persons, if satisfied that it has ceased to carry on business, is unable to pay its debts, or it is just and equitable.
While the Judicature Act 1908 does not define an "association", in other statutes trustees are within the definition, for example the Goods and Service Tax Act 1985 and the Child Support Act 1991. The Court found that section 17A gives jurisdiction to a Court to appoint a liquidator to a trust if it is satisfied that there are reasons for doing so.
The Court was satisfied that the Trusts were unable to pay their debts and found it appropriate to appoint liquidators in respect of assets and liabilities held by the trustees of the Trusts. The liquidators were ordered to report to the Court on the details of the Trusts and provide recommendations for future steps in the liquidation.
See Court decision here.