Bankruptcy and Financial Settlement – Matrimonial causes Act 1973

We often deal with clients in bankruptcy where there has been a financial settlement agreed prior to either the husband or wife having declared bankrupt. In some cases, we are asked to advise on the possibility of challenging the Settlement as a Transaction at Undervalue under the Insolvency Legislation 1986.

Is it possible to reopen a divorce settlement?

Yes, but very rare and can be extremely costly. In most circumstances once the official Consent Order is granted then neither of them will be entitled to make financial claims in the future.

Nevertheless a precedent set during the case of Barder vs Barder (1987) means that a court may allow a financial settlement to be reopened if something later happens that alters the principle on which the original consent order was made. The case law is available to read on our website marked as Barder vs Barder.

The following considerations need to be satisfied before the court will agree to open the case.

1. A new event(s) occurs that invalidates the basis, or fundamental assumption, on which the original consent order was made.
2. The new event(s) must have occurred within a relatively short time after the consent order was made.
3. The request to re-open the financial settlement is made soon after the new event occurs.
4. The appeal does not prejudice any rights to assets acquired by third parties (for example, if a house has been sold to an unconnected third party).

A successful application to reopen a Financial Settlement was made in the case of Critchell vs Critchell (2015). You can read about it on our website under case law Critchell vs Critchell

If you are insolvent and thinking about bankruptcy or have been made bankrupt by a creditor and there are certain issues around your divorce which the Trustee or the Official Receiver in bankruptcy is investigating, then please feel free to call me. We have successfully assisted clients in relation various circumstances which become complicated due to Divorce and bankruptcy.

Next Steps

If you want to find out anything further about this topic then please feel free to call on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email vee@navigatebr.com

This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising because of any person or organisation acting or refraining from acting on any information.