the Irish for rights

Bad bank has four remedies for ‘clawback’ – Irish, Business – Independent.ie

By Dearbhail McDonald Legal Editor

Friday January 14 2011

THE National Asset Management Agency has four legal ways to overturn property transfers — including transfers by developers to spouses, children and other third parties — that it believes were aimed at defrauding current or future creditors. …

If a developer is bankrupt, transfers in the two years leading up to the bankruptcy can be set aside. Transfers in the previous five years can also be set aside in a bankruptcy unless a developer can prove that he was solvent at the time he transferred or gifted the asset.

If property was transferred before 2009, can use the 1634 Conveyancing Act Ireland which allows property conveyances and other transactions to be declared void if they are made for the purpose of delaying, hindering or defrauding creditors. If property was transferred after December 1, 2009, the 2009 Land and Conveyancing Reform Act allows for transfers to be set aside if there was an intention to defraud a creditor.

Finally, the NAMA Act itself contains a miscellaneous provision that gives the toxic loans agency powers to void transfers effected by debtors and those who provided loan guarantees, including personal guarantees.

Section 211 of the National Asset Management Agency Act, 2009 provides that a disposition made to defeat, delay or hinder the acquisition by NAMA of an asset, or to impair the value of an asset can be set aside by a court. Section 10 of the Conveyancing Act (Ireland) 1634, in wonderfully overblown seventeenth century legalese provides that all transactions “devised and contrived of malice, fraud, covin, collusion or guile, to the end, purpose and intent to delay, hinder or defraud creditors and others of their just and lawful actions” are “utterly void, and of none effect”. The Act was repealed (with effect from 1 December 2009) by the Land and Conveyancing Law Reform Act 2009, and section 10 of the 1634 Act was replaced by section 74 of the 2009 Act:

(1) … any voluntary disposition of land made with the intention of defrauding a subsequent purchaser of the land is voidable by that purchaser. …

(3) … any conveyance of property made with the intention of defrauding a creditor or other person is voidable by any person thereby prejudiced. …

In fact, the range of remedies is probably greater. There is a wide range of doctrines such as fraudulent preferences and similar in liquidation and bankruptcy, but there are also basicrules of equity: the family donees are not thrid party purchasers for value without notice, so if NAMA have an equity, the donees take subject to it; and there may be a constructive trust or similar equitable proprietary claim, perhaps founded on fraud or wrongdoing (see, eg, AG for Hong Kong v Reid [1994] 1 AC 324 (PC)).

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Me in a hatHi there! Thanks for dropping by. I’m Eoin O’Dell, and this is my blog: Cearta.ie – the Irish for rights.

“Cearta” really is the Irish word for rights, so the title provides a good sense of the scope of this blog.

In general, I write here about private law, free speech, and cyber law; and, in particular, I write about Irish law and education policy.

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