Ashfords successfully acted for the Joint Trustees in Bankruptcy of Vincent Mascarenhas (deceased) in their application to discharge Freezing Orders, an Interim Charging Order and an Interim Third Party Debt Order obtained by creditors of the late Bankrupt in 2014. The Joint Trustees were not a party to the original proceedings but had standing to make the applications.
The Joint Trustees in Bankruptcy of Vincent Mascarenhas (deceased) applied to discharge Freezing Orders, an Interim Charging Order and Interim Third Party Debt Order obtained in 2014 by two separate creditors of the late Bankrupt, S and A.
The Joint Trustees were not a party to either of the original proceedings. It was held that the present application was a freestanding application which the trustees were entitled to make, following Cretanor Maritime Co v Irish Marine Management Ltd  1 WLR 966.
The late Bankrupt's property and a bank account are the only assets of any realisable value in the bankruptcy estate and have vested in the Joint Trustees. The three year 'use it or lose it' period as set out in s.283A Insolvency Act 1986 is due to expire in February 2019.
S had instructed the late Bankrupt's company in relation to a construction project in India. S alleged that it had transferred $400,000 to the late Bankrupt's company to invest in the buying and selling of notes, but that the money had been misappropriated. S obtained a Freezing Order against the Defendants, including the late Bankrupt and the company, in July 2014, as extended. That Freezing Order was registered as a restriction over the title of the late Bankrupt's jointly owned property. S obtained default judgment in November 2014, with damages assessed in April 2016 of over £500,000.
In separate proceedings, S had unsuccessfully applied to annul the Bankruptcy Order, some 20 months after it had been made, and was ordered to pay the Joint Trustees' costs. That costs order remains unpaid. Subsequent applications to appeal, filed out of time, and for relief from sanctions were refused.
A had instructed the late Bankrupt's company in relation to a construction project in Nepal, and alleged that it had paid $2 million to secure funding which had not materialised. A alleged conspiracy to defraud arising out of the late Bankrupt's representations. A obtained a Freezing Order against the Defendants in July 2014, as extended, as well as an Interim Charging Order and an Interim Third Party Debt Order. These were also registered as restrictions over the title of the late Bankrupt's jointly owned property. A obtained default judgment and damages were assessed at nearly $3 million.
The late Bankrupt petitioned for his own bankruptcy in June 2015 with a Bankruptcy Order being made in February 2016.
S and A are unsecured creditors of the bankruptcy. The Freezing Orders created no proprietary interest, and as the Charging Order was not made final prior to the bankruptcy, A was not entitled to retain the benefit of the interim order. The assets have vested in the Joint Trustees and the late Bankrupt has died, and therefore it was held that there could be no risk of dissipation.
Although the Joint Trustees' application to discharge the Freezing Orders related solely to the late Bankrupt, given that four years had passed, the court held that it was appropriate to discharge the Freezing Orders against all of the Defendants in the original proceedings. The order would notify A and S that unless they make representations to maintain the Freezing Orders against the other Defendants within 28 days, the orders would be discharged in full.
The Court held that the restrictions at the Land Registry were to be cancelled and, in relation to A, the Interim Charging Order and Interim Third Party Debt Order were discharged.
A was ordered to pay the Joint Trustees' costs of the application.
The Joint Trustees asked S to discharge the Freezing Order over a thirteen month period, with no response or engagement in relation to that point. Given this unreasonable failure to engage with the Joint Trustees, S was ordered to pay costs on the indemnity basis.
The decision shows the Court was able to assist office holders in connection with their statutory duties to realise assets, by discharging Freezing Orders that were of no benefit to the parties who had sought them given they were now unsecured creditors of the estate. Further, it is another reminder that where a party acts unreasonably, the Court will penalise that party on costs.