Where an individual or company is unable to meet their debts and liabilities and usually as a last resort when avenues and attempts at compromise have been exhausted, the Court may declare the property of the said bankrupt en désastre.

The Royal Court, in The Viscount v Booth [2017] JRC 215, acknowledged that this had happened to Mr Booth’s home, King’s Oak.

The issue for the Court in Booth was whether or not a decision taken by the Viscount, as the Chief Executive Office of the Court and administrator of désastres, to sell King’s Oak for £1.85m was within the range of reasonableness. While the Viscount had made the decision and considered it within the range of reasonableness, she nevertheless sought the Court’s approval in advance to avoid any subsequent attacks or criticism.

When monies were lent and secured on King’s Oak, a firm of surveyors valued it at £4m. Mr Booth relied on this valuation to suggest that more time should be allowed to see if a higher price can be obtained. Curiously valuations obtained on the Viscount’s behalf put the value of King’s Oak somewhere between £2.4m and £3m.

The Court acknowledged that the Viscount had a duty to sell for the best price reasonably obtainable and gave its support to the Viscount’s approach of marketing King’s Oak for 18 months with more than one estate agent (initially two with a third later on) as a powerful indicator that it had attained the best price reasonably obtainable. The Court also noted the prejudice of a delay, particularly in a désastre where creditors remained unpaid.

As ever, the circumstances of each case turn on their own facts but the guidance provided in Booth may be useful when considering property dealings subject to a désastre or more generally regarding marketing properties to attain the best price.

Booth also acts as a stark reminder of the significant powers in a désastre given to the Viscount who, as the Court noted, has a wide discretion to manage a désastre and should only refer matters to the Court’s supervisory jurisdiction when there is a need to do so. As evidenced in Booth, the discretion (which is broadly similar to discretions given to liquidators etc) allows the Viscount, providing they have gone through fairly small hoops, to sell assets significantly below a professional valuation. This, naturally, may be of concern to those who provide or rely on such valuations.

If you own a property or have secured lending and are involved in a dispute concerning the same, Sinels can assist to help guide you through this stressful time. There are alternatives to a désastre and these can be discussed with you to ascertain what may be the best options for you.

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