When negotiating the sale of the bankrupt’s interest in their home to a spouse, other family member or even back to the bankrupt if they have been discharged, ie other than in the open market, the trustee has a high degree of discretion over the sale price, as long as it is in the best interests of creditors. Whilst selling the bankrupt’s interest for less than apparent full value is not a compromise requiring sanction from the creditors’ committee or Secretary of State, we suggest that it is still good practice to report to creditors in advance of finalising the transfer whenever possible.
The report should briefly explain your reasons for accepting the offer and compare it with the alternative of taking possession proceedings. Whilst it is not necessary to obtain a resolution empowering you to sell the property, you may still wish to ask creditors for any comments they might have. Give them say 14 days to make comments. You do not want to delay the sale unnecessarily. Be prepared to justify your decision.
Taking such a step keeps creditors informed and avoids complaints and awkward questions from creditors after the event. On occasions though, creditor opposition that you cannot overcome may mean that a sale does not proceed. You will, of course, need to make it clear to the purchaser that you are reporting to creditors and that the sale is dependent upon them not raising any significant objections.
