Court of Appeal provides clarity on pension rights of bankrupts (Horton v Henry)

Court of Appeal provides clarity on pension rights of bankrupts (Horton v Henry)

Following on from our blog post: Court of Appeal dismisses appeal in IPO caseSimon Passfield, specialist insolvency barrister at Guildhall Chambers, examines the Court of Appeal’s judgment in Horton v Henry and discusses what it means for bankrupt pension holders and their creditors, as well as practitioners.

Original news

Horton (as trustee in bankruptcy of Michael Gerard Henry) v Henry [2016] EWCA Civ 989, [2016] All ER (D) 50 (Oct)

The Court of Appeal, Civil Division, dismissed the trustee in bankruptcy’s appeal, thus holding, that section 333(1) of the Insolvency Act 1986 (IA 1986), read in conjunction with IA 1986, s 310, did not enable a trustee in bankruptcy to require a bankrupt, who had reached the age at which he was contractually entitled to draw down or ‘crystallise’ his pension (but had not done so), to elect to do so, so that the trustee might apply for an income payments order, under IA 1986, s 310, in relation to the funds drawn, or to be drawn, down. Since rights under registered personal pension schemes no longer formed part of the bankrupt’s estate which vested in the trustee, in the absence of express statutory language conferring such a power, there was no basis for concluding that the court had power to require a bankrupt to exercise his options in any particular way.

What was the background to the appeal?

In Raithatha v Williamson (a bankrupt) [2012] EWHC 909 (Ch), [2012] All ER (D) 57 (Apr), Bernard Livesey QC held that the court could make an income payments order (IPO) in respect of a bankrupt who, having reached the age of 55, was entitled (but had not yet elected) to draw down his pension, on the basis that he had ‘become entitled’ to the income from the pension for the purposes of IA 1986, s 310(7). That decision was considered to be controversial

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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.