Legally..........if a purchaser declares bankruptcy in the middle of a purchase, then the Letter-of-Undertaking will be the first point of reference on how this matter will be treated. Second stop will be the Department of Insolvency, who will decide the stage at which the progress payments have been released, then from there provide judgement on which party has right to the proceeds recovered from the property that is indicated in the Sales and Purchase Agreement.

The Sales and Purchase Agreement will reference the property in-question, though one party in the agreement has given up his rights to the property because of a bankruptcy filing, and judgement that has been passed down by the courts.

Hope this helps.