Divorcing property tycoon declared bankrupt

The wife at the centre of a £400m divorce battle may quickly be reviewing her finances following revelations that her property tycoon husband has been declared bankrupt by the tax man.

Mr and Mrs Young married in 1985. During their marriage they enjoyed a jet-set lifestyle amongst the international elite. Their acquaintances included Hollywood A-list celebrities, leading entrepreneurs, Russian Oligarchs and senior statesmen, including Bill Clinton. During the marriage, Mr Young enjoyed significant success in the real estate business. He amassed a large fortune and property portfolio, including properties in Mayfair and Knightsbridge worth £32m, a £19m Surrey property and a £4.5m mansion in Miami.

After the break down of their marriage, Mrs Young sought a divorce, but her husband’s fortune was disappearing rapidly. Mr Young was ordered to pay £27,000 per month to his wife to cover private school fees and the rent on Mrs Young’s Regent Park mansion, but he fell behind on the payments. Since the Order was made, reports suggest that Mr Young has been declared bankrupt by HMRC due to a £2m unpaid tax bill with debts amounting to £27m.

Mr Young has not yet given a full account of his assets, and Mrs Young is claiming that her husband has concealed the true extent of his wealth. Reports suggest that she is rapidly running out of funds, and has been unable to pay her legal costs, which now amount to £660,000.

The Law
On bankruptcy, a Trustee in Bankruptcy is appointed on behalf of the creditors (i.e. the people who the bankrupt owes money to) to deal with the bankrupt’s assets. The Trustee’s objective is to realise and distribute those assets, and to protect the interests of the creditors.

Where a divorce settlement is pending but bankruptcy proceedings have begun, the Court will not be able to finalise a divorce settlement without the consent of the Trustee in Bankruptcy. However, where it can be proved that the bankruptcy has been used as a tactic to defeat a spouse’s claim, the claiming spouse may be able to have the bankruptcy order annulled.

Our Advice
If you have separated from your spouse and are considering a divorce then you need to act quickly if you think that your spouse may be struggling financially. This is particularly true if you hold assets, such as your house, in joint names. For further advice please contact Kim Aucott on 0161 234 8874 or Michael Chapman 0161 234 8804.