News: Bankruptcy should annul matrimonial debts, claims former boss
When Alexander McRoberts, now 54, separated from his wife Mandy in 2003, she was granted their former home, and he also agreed to give her a lump sum in excess of £500,000 payable in instalments. At the time his company was highly successful, generating a multi-million pound turnover.
However, three years later Mr McRoberts went bankrupt, by which point he had paid his former wife only £211,000. The following year his bankruptcy was discharged and he became the CEO of a baggage handling firm. However, that company has now also come to an end.
His wife, who is now the director of a car hire firm, is now pursuing Mr McRoberts for the outstanding £394,000. She was a creditor in Mr McRoberts’ bankruptcy. He is now asking the court to rule that his financial obligations to his ex-wife did not survive that bankruptcy.
He acknowledged that the case raised a “novel point” and added: “Mrs McRoberts’ financial circumstances, as is clear, are far more comfortable than her ex-husband’s.”
Mr McRoberts fears that he may be driven into a second bankruptcy if he is forced to settle the debt to his ex-wife.
Speaking for the wife, however, barrister Byron James said a ruling in the husband’s favour could be open to exploitation in future divorce proceedings.
Mr Justice Hildyard said: “I don’t want to do anything that suggests that so long as you go into bankruptcy that is the gateway to avoiding the family court’s orders….The default position is that, although the bankrupt gets a new start in life, he still has round his neck orders made in family proceedings for lump sums and costs.”
But he added: “If the ongoing order was made as a crystal ball assessment of the parties’ needs, it may well be that the bankruptcy court can take those changing needs into account.”
The case “raised some curiosity as to the relationship between the bankruptcy jurisdiction and the family jurisdiction” and needs “some further reflection”.
The judge reserved his decision until a later date.
Photo by EJP Photo under a Creative Commons licence
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Marilyn Stowe is the senior partner in Stowe Family Law, which has offices in Yorkshire, Cheshire and London. With more than 30 years’ experience handling divorce cases and family law proceedings she is regarded as one of the most formidable and sought after divorce lawyers in the UK. In 2012, Marilyn became one of the first solicitors to qualify as a family law arbitrator.
All persons mentioned in the scenarios are fictitious: details have been deliberately changed in order to protect identities and other confidential circumstances of my clients. All advice and information on this blog including posts written by guest authors, is given only as a general guide to the operation of the law on the date of publication. Readers must place no reliance whatsoever on the content of this blog and must always obtain their own legal advice. Marilyn Stowe, Stowe Family Law LLP and guest authors accept no liability whatsoever arising as a result of reliance upon its content.
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