Family law meets insolvency: protecting the home, balancing creditors

Charlotte Posnansky, Hanh Nguyen, Jamie Kennaugh, Francesca Heath-Clarke and Daniel Staunton, Charles Russell Speechlys LLP

This article explores the interplay between family law and insolvency law involving the family home, usually the most valuable asset available to satisfy both financial remedy claims and creditor recoveries. We explore commonalities of approach by the family and insolvency courts. Both have similar policy aims, namely to protect vulnerable innocent parties (usually spouses and children) where possible, and have sought to do so through the enforcement of various statutory provisions and the development of equitable principles. These provisions and principles are all crafted to protect occupation rights or to assert ownership rights, aiming to prevent or delay the repossession and sale of the family home. On the flip side we also explore how the approach of the family and insolvency courts can often collide. We look first at competing stakeholder interests in the insolvency sphere, recognising how this can result in creditors’ interests prevailing over those of spouses/children and oust the statutory protections that would otherwise be in place, save in limited circumstances. Finally, the article takes a deep-dive into recent authorities on the equity of exoneration.