Re Badham ex parte Palmer: 1893

The debtor made payments to creditors after the bankruptcy petition had been presented, and after the act of bankruptcy. After the debtor had been adjudicated bankrupt the trustee in bankruptcy sought to recover the payments as fraudulent preferences. The application could not succeed on this ground, since the payments were made after presentation of the petition; but it succeeded on the ground that, because of the doctrine of relation back, the debtor had paid the creditors out of money belonging to the trustee. The question then arose whether the transactions were covered by the section which protected persons who dealt bona fide and for value with the bankrupt during the period of relation back. In relation to the effect of the relation back, it was.
Held: ‘What state of things does that leave? The title of the trustee relates back to the petition (sic). The payments were made after the petition. Prima facie, therefore, the payments were made by the bankrupt out of moneys which belonged to the trustee . . What has happened is that there has been a disposal of moneys which prima facie did not belong to the bankrupt at all, but belonged to his trustee . . I hold that the money was the property of the trustee at the time when the bankrupt paid it away and the case does not come within the protecting section.’
References: [1893] 10 Mor 252
Judges: Vaughan Williams J
Statutes: Bankruptcy Act 1883 49
This case is cited by:

  • Cited – Re Dennis (A Bankrupt) CA 22-May-1995
    A joint tenancy was severed (under the former law) on the event of an act of bankruptcy, and not only by the later actual adjudication of bankruptcy. The vesting of the debtor’s property in the trustee which occurred on adjudication was automatic; . .
    (Ind Summary 22-May-95, [1995] 3 All ER 171, [1995] 3 WLR 367)

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Last Update: 27 November 2020; Ref: scu.186756