The High Court has held that a bankrupt’s unexercised rights to draw his pension did not represent income to which the bankrupt was entitled and so refused to make an income payments order, contradicting the controversial decision in Raithatha v Williamson which held that a bankrupt’s right to draw income from a personal pension may be subject to an income payments order even if the individual has yet to draw his pension.

Horton v Henry [2014] EWHC 4209 (Ch)

Key point

Pensions in payment were within the ambit of section 310(7) of the Insolvency Act 1986 (the "Act"), but pensions not in payment were not payments to which a bankrupt was “entitled” as the right to draw had not been excerised. The court therefore refused to make an income payments order ("IPO").

The Facts

On 31 December 2014, the Financial Services (Banking Reform) Act 2014 (Commencement No 7) Order 2014, SI 2014/3160 extended the list of unsecured debts afforded preferential status in insolvency proceedings. Following this recent change, it is worth reminding ourselves how assets are distributed in a corporate insolvency.

General Principles

Declining to follow a 2012 decision, the High Court has ruled that a bankrupt’s unexercised rights to draw his pension did not represent income to which he was entitled within the meaning of the Insolvency Act 1986, and so did not form part of the bankruptcy estate.

Background

The UK court recently considered the extent of s236 Insolvency Act 1986 (“IA 1986”) in the case of Re Comet Group Ltd (in liquidation); Khan and others v Whirlpool (UK) Ltd and another [2014] EWHC 3477 (Ch).

Key Points

• Paragraph 13 of Schedule 4 to the Insolvency Act 1986 ("Paragraph 13") permits a liquidator to do all acts "necessary" for the winding up and distribution of property.
• The decision as to what action is "necessary" is one for the liquidators (albeit subject to sanction).
• Nothing in FSMA 2000 prevented the investors from assigning their claims against the former operators..

The facts

The High Court has considered whether a former liquidator should be held liable under section 212 of the Insolvency Act 1986 (the “Act”) for misapplying company monies in excess of half a million pounds.

The Facts

Key Issue

A former liquidator would not be entitled to relief from liability under section 212 of the Insolvency Act 1986 where her conduct had fallen well short of the standard to be expected and she had paid away substantial sums which would otherwise be available to creditors.

The Facts

Key point

Only a current liquidator or a current creditor has standing in an English liquidation to pursue a claim under  section 212 of the Insolvency Act 1986 ("IA 86"). A former liquidator has no standing to apply to court to expunge a proof of debt (Insolvency Rule 4.85).

The facts

Introduction

The Chancellor’s 2014 Budget speech revealed significant  changes to the way in which pension scheme members will be  able to access their savings. This move falls as just one of a raft  of changes to workplace pensions which Steve Webb MP has  described as a “pensions revolution”.