Pre-Bankruptcy Settlement Case


Instructed by a bank to pursue two directors who had personally guaranteed a property loan with a shortfall of £2m following sale of the land. The bank had few records and was keen to recoup their losses.



Moorfields undertook initial investigations which identified a number of property assets with equity.

In order to avoid secretary of state fees (15% government levy) and the risk of diluting the bank’s recovery through other unsecured creditor claims, Moorfields recommended obtaining summary judgement in order to secure part of the debt via full charging orders.



Charging orders over 3 properties were obtained which secured the bank for £1m of the liability, following which, Moorfields proceeded to obtain a negotiated settlement of £250k as a full and final settlement, representing a 62% recovery for the bank.

It was established that if the bank had immediately proceeded with making the guarantors bankrupt, the recovery to the bank would have been less than 35% due to the government fees and dilution to other creditors.