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How should office-holders of trusts deal with the management and distribution of funds? Matthew Weaver, barrister at St Philips Chambers, considers the court’s inherent jurisdiction following the decision in Re Allanfield Property Insurance Service Ltd (in administration) and others.
Re Allanfield Property Insurance Services Ltd (in administration); Re Industrial and Commercial Property Insurance Consultants Ltd (in administration); Allanfield Property Insurance Services Ltd (in administration) ("Apis") and others v Aviva Insurance Ltd and another  EWHC 3721 (Ch),  All ER (D) 198 (Dec)
The Companies Court held that directions for the administration of the statutory trusts could be given on an application under paragraph 63 to Schedule B1 to the Insolvency Act 1986 (IA 1986) and, on the application of the administrators, it gave directions regarding the distribution of money in the client accounts of insurance intermediary companies which had gone into administration.
As with all applications by office-holders regarding trusts and how they should be managed and distributed, this case is highly fact specific. However, there were some general observations which will prove helpful to insolvency practitioners (IPs) faced with similar or analogous situations.
Applications under IA 1986, Sch B1, para 63 can cover trusts and issues in respect of trusts. The Civil Procedure Rules 1998 (CPR), SI 1998/3132, Pt 64.2 does not apply to these applications and the court’s inherent jurisdiction allows a wide range of directions to be made.
Office-holders should attempt to deal with trusts even if the lack of information creates an imperfect solution which could prejudice one or more classes of creditors. The court will look to balance all interests as fairly as possible.
There is no principle why trusts ought not to be able to trace into other trusts in cases of breach of trust and, therefore, benefit the beneficiaries of that trust. If the tracing claim is not
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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.
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