Re Citro [1991] Ch 142

Court of Appeal

Basic Facts: Two brothers were declared bankrupt, resulting in their beneficial interest in their respective matrimonial homes being transferred to their trustee in bankruptcy. The trustee then ordered the sale of the homes under the Insolvency Act 1986. The bankrupt’s spouse, argued against the sale, citing exceptional circumstances under s.335A(3) which could prevent the sale.

Issue for the Court: What constitutes "exceptional circumstances" under the Act?

Held : The court held that the interests of creditors outweigh those of the bankrupt's family in cases of forced sale of property.

(Nourse LJ):

• Issues like the impact on children’s housing or schooling do not qualify as exceptional circumstances under s.335A(3). Exceptional circumstances typically involve conditions that significantly impair the creditors' position if the sale proceeds.