Raithatha v Williamson (4 April 2012) and Blight and others v Brewster (9 February 2012)
Most pension schemes give the beneficiary an option as to when to start to draw the pension, and whether or not to draw a tax free lump sum. These two cases confirm that a trustee in bankruptcy and a judgment creditor are each entitled to compel a debtor to draw the maximum permitted by the scheme rules, so that the monies realised as a result are available to pay the debt.
Pension schemes and bankruptcy
The High Court has recently considered whether a bankrupt individual of pensionable age can be forced to draw his pension to pay his creditors.
Raithatha v. Williamson [2012] EWHC 909 (Ch)
Background
A bankruptcy order was made against Mr Raithatha on 9 November 2010. Mr Raithatha's trustee in bankruptcy applied for an income payments order (IPO) against Mr Raithatha's pension shortly before he was due to be discharged from bankruptcy. Mr Raithatha was then aged 59 and his pension scheme allowed him to draw a pension from age 55.
On December 29, 2011, the US Court of Appeals for the Third Circuit issued an opinion in the chapter 11 bankruptcy case In re Nortel Networks, Inc., holding that the "automatic stay" on creditor collection actions outside the bankruptcy applied to prevent the UK Pension Protection Fund and the Trustee of the UK Nortel Pension Plan from participating in UK pensions proceedings initiated by the UK Pensions Regulator.
In the recent English case of Pick v Chief Land Registrar [2011] EWHC 206(Ch), the High Court held that a buyer was entitled to be registered at the Land Registry as the registered proprietor of a property sold by a bankrupt. This was the case, even though the buyer allowed the priority period in which to effect registration to lapse, and the entry of a bankruptcy restriction was made on the title after the date of the transfer, but before the application for registration.
On October 31, 2011 (the “Petition Date”), MF Global, which up to that point had been one of the world’s largest broker/dealer firms, was plunged into insolvency on both sides of the pond. On the Petition Date, MF Global Holdings, Ltd. and MF Global Finance USA, Inc. (the “US Debtors”) each filed voluntary bankruptcy petitions under chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the Southern District of New York. Contemporaneously with the U.S. bankruptcy filings, the Securities Investor Protection Corporation initiated the liquidation of MF Global, Inc., the U.S.
TiBs frequently assign the right to recover debts due to the bankrupt’s estate. The advantage to the TiB is that he receives a lump sum or a share of the proceeds of a successful claim for the benefit of the bankrupt’s creditors without having to fund and pursue litigation himself. In most cases, once a TiB has assigned the right to recover the debt that will be the end of the matter; he just has to wait for the litigation to be concluded when payment of the agreed share will be made. A recent Court of Appeal decision means that this will not always be the case.
Earlier this year, the High Court gave judgment in a case involving a bankrupt who owned property in Morocco (Saunders v Donovan, unreported). The bankrupt had also granted someone a power of attorney in respect of the Moroccan property. The question that fell to be decided by the High Court was four-fold:
In Re Ruiz (a bankrupt) [2011] EWHC 913 (Fam) the High Court ruled that a wife’s right to occupy the matrimonial home did not prevent her husband’s trustee in bankruptcy (TiB) gaining and enforcing a proprietary interest in the property.
The Facts
M and G married in 2001 and moved into a house purchased by M and registered in his sole name. In 2006 divorce proceedings were initiated, following which G obtained a freezing order over M’s assets and an occupation order over the marital home.
A common issue facing landlords of commercial premises is to decide what to do if one of its tenants has stopped paying the rent and has entered into one of the types of insolvency prescribed by statute. In the case of companies, these can include company voluntary arrangements, administration, administrative receivership, Law of Property Act receivership or liquidation. In the case of individuals, they might include individual voluntary arrangements or bankruptcy.