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Sheriff refuses trustee reappointment as only professionals would benefit

16 August 2017

A sheriff has refused an application by a former trustee for reappointment after new funds were received in a bankrupt estate, where it appeared that "no one was likely to derive any significant benefit" other than the professionals involved.

Sheriff Anthony Deutsch in Glasgow Sheriff Court took the view that claims to the money could be more appropriately settled through an action of multiplepoinding.

The issue arose in the estate of Mary Johnstone, who was sequestrated in 2009 and had since been discharged, as had her trustee. The former trustee then received a payment of £2,817.91 in refund of payment protection insurance payments made by the debtor before her sequestration. On the sheriff requesting information as to the likely costs involved and who would benefit, a statement was produced estimating professional fees and outlays at £2,344.38, leaving £473.53 for dividend. At a hearing it was explained that no dividend had yet been paid and the trustee did not know the number of creditors or the value of their claims, or who would benefit from this sum or to what extent.

Sheriuff Deutsch said the court had a discretion whether to grant the application. "Upon the information provided I concluded that no one was likely to derive any significant benefit from the reappointment of the former trustee other than the professionals involved", he stated. "In the circumstances I did not consider it to be an appropriate exercise of the court’s discretion to grant the application."

One obvious course would be for the trustee to return the money to the paying bank, stating that the creditors were unknown, there was no reason to believe that any might now emerge, and he had no objection to the money being paid to the debtor.

If he considered this course "too risky", then although generally speaking the proper forum for dealing with assets and claims was within the sequestration process, "Here, where the former trustee appears to be without basic information, claims could be dealt with more expeditiously and at much less cost by the former trustee raising a summary cause action of multiplepoinding" – the costs of which he estimated at £397.50 plus any necessary advertising for claims, though this could be done for free in the Metro newspaper.

Click here to view the sheriff's decision.

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