Court of Appeal dismisses appeal in IPO case (Horton v Henry)

Court of Appeal dismisses appeal in IPO case (Horton v Henry)

The Court of Appeal has handed down its long-awaited judgment in Horton (as Trustee in Bankruptcy of Michael Gerard Henry) v Henry dismissing the appeal brought by Mr Horton against the decision of Robert Englehart QC (sitting as a Deputy Judge of the Chancery Division) dated 17 December 2014. The High Court had held that the court did not have the power to require Mr Henry (or indeed any bankrupt) to elect to draw down his pension in any particular way within the context of an application by a trustee in bankruptcy (trustee) for an income payments order (IPO) under section 310 of the Insolvency Act 1986 (IA 1986).

Original news

Horton (as Trustee in Bankruptcy of Michael Gerard Henry) v Henry [2016] EWCA Civ 989

What are the practical implications of the decision?

Many IPO applications issued in light of Raithatha v Williamson [2012] EWHC 909 (Ch), [2012] All ER (D) 57 (Apr) (see below) were stayed pending the appeal in Horton. The Court of Appeal's decision means that those applications can now be reactivated and dealt with appropriately.

In dismissing Mr Horton's appeal, the Court of Appeal has confirmed that a trustee may not apply for an IPO in circumstances solely where the bankrupt has an uncrystallised pension but has decided not to make any election, which had generally been through to be the position before Raithatha because of the policy reasons behind section 11 of the Welfare Reform and Pensions Act 1999 (WRPA 1999). The decision is likely to put off creditors from petitioning for a debtor's bankruptcy where they are aware the debtor has valuable pension policies, is entitled to make an election, and has little or no other assets that would form part of the bankruptcy estate—had the appeal been allowed, that may have been an option available to them.

The decision is also important in light of the changes brought about by the Taxation

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.