Evaluating the effect of restraint orders on bankruptcy (Re Whyte, Brittain and another v Whyte and another)

Evaluating the effect of restraint orders on bankruptcy (Re Whyte, Brittain and another v Whyte and another)

In light of the ruling in Re Whyte, Brittain and another v Whyte and another, Marcia Shekerdemian QC, barrister at Wilberforce Chambers, who acted for the applicants, discusses the main legal issues and arguments before the court, and what trustees in bankruptcy would be prudent to take away from this decision.

Original news

Re Whyte, Brittain and another v Whyte and another [2016] Lexis Citation 545, [2016] All ER (D) 03 (Sep)

The applicant trustees in bankruptcy sought directions in a case where both a restraint order under the Proceeds of Crime Act 2002 (POCA 2002) and a subsequent bankruptcy order had been made against a bankrupt party, W. The High Court held that, on the proper construction of section 306A of the Insolvency Act 1986 (IA 1986) and POCA 2002, s 417, all and any property which was or might become the subject of the restraint order and which would—but for the restraint order, be vested or be capable of vesting in the trustees, including any property acquired by or devolving upon W at any time between the commencement of his bankruptcy and the date of its discharge—would vest in the trustees as part of W’s bankruptcy estate immediately upon the discharge of the restraint order.

What was the background to the case?

Louise Brittain and Keith Stevens, as joint trustees in bankruptcy (TIB) of Mr Whyte (W), sought declarations as to the construction of IA 1986, s 306A and its interface with the restraint order (RO) provisions in POCA 2002.

W is the subject of criminal proceedings in Scotland. On 11 September 2015 (and before W was made bankrupt), the Crown Office and Procurator Fiscal Service obtained an RO in respect of all W’s realisable property under POCA 2002, s 120 (POCA 2002, s 41 in England and Wales). The effect of an RO is to prevent a defendant from dealing with his

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About the author:
Kathy specialises in restructuring and cross-border insolvency. She qualified as a solicitor in 1995 and has since worked for Weil Gotshal & Manges and Freshfields. Kathy has worked on some of the largest restructuring cases in the last decade, including Worldcom, Parmalat, Enron and Eurotunnel.