On the appointment of a trustee in bankruptcy, the assets to which a bankrupt is beneficial entitled vest in the trustee and form the bankruptcy estate. The bankrupt is under an on-going obligation to notify the trustee in bankruptcy if during the course of the bankruptcy he acquires any beneficial interest in other property which then form part of the bankruptcy estate as after-acquired property.
Lord Sumption identified the evasion principle as a means by which the court, in very limited circumstances, can pierce the corporate veil and held that when a person is subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control, the court may pierce the corporate veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage they would otherwise have obtained by the company’s separate legal personality.
For the first time the court has pierced the corporate veil in the bankruptcy context. This case involved a complex bankruptcy, the details of which are as follows:
- The bankruptcy order was made in June 2005;
- The bankrupt was convicted of various dishonesty offences on a number of occasions;
- The trustees in bankruptcy were tasked with tracing and tracking down the bankrupt’s property and affairs through a network of individuals, companies and business entities; and
- The trustees were informed by HMRC that large sums of money were being paid through accounts held by certain companies on behalf of the bankrupt.
On receiving this information the trustees in bankruptcy made an urgent without notice application for an injunction to preserve funds in the companies’ bank accounts and sought a declaration that the business and assets of each of the company respondents were held by each on trust for the bankrupt, or were otherwise owned and controlled by him.
The court was satisfied that the bankrupt had a long-standing history of concealment, that he was the man behind the various corporate entities and that he was using the companies to shelter money and assets. These assets were, therefore, capable of being the subject of an after-acquired property …
 section 306 of the Insolvency Act 1986 (the Act)
 Insolvency Rules 1986 (SI 1986/1925) (IR 1986)
 Prest v Petrodel Resources Ltd and others  UKSC 34
  EWHC 2536 (Ch)
 notice under section 307 of the Act