Divorce and insolvency

In Hill and another v Haines [2007] EWHC 1012 (Ch), the High Court has held that the transfer of assets between divorced spouses is a transaction at undervalue and is, therefore, voidable under the Insolvency Act 1986.

The spouse who receives assets from their ex-spouse will, therefore, remain exposed to potential claims by the transferor's creditors in the five years which follow.

This opens up the potential for the vengeful transferor to go on a spending spree, render themselves insolvent and cause his, or her, creditors to seek recovery of assets previously transferred to the ex-spouse.

The decision has retroactive effect and will apply to individuals who have transferred assets to their ex-spouse within the past five years and since become insolvent.