Personal injury claims involving a bankrupt or insolvent party
Produced in partnership with Phillip Patterson of Hardwicke Chambers
Personal injury claims involving a bankrupt or insolvent party

The following PI & Clinical Negligence guidance note Produced in partnership with Phillip Patterson of Hardwicke Chambers provides comprehensive and up to date legal information covering:

  • Personal injury claims involving a bankrupt or insolvent party
  • Insolvency of the claimant
  • Insolvency of the defendant
  • Insurance
  • Anticipating and identifying insolvency
  • End of bankruptcy process
  • Dissolved companies

This Practice Note is intended to highlight a range of issues which arise in personal injury claims where either the claimant or defendant becomes insolvent.

It is important first to distinguish between two distinct but related concepts.

A company is insolvent where either it is unable to pay its debts as they fall due or where the value of the company’s assets is less than the amount of its liabilities. Although less explicit in the Insolvency Act 1986 (IA 1986), the same criteria would also determine whether or not an individual is insolvent.

The concept of insolvency is to be distinguished from the factual question of whether or not either an individual or a company is in an insolvency process. In the case of a company, the principal processes are liquidation and administration. In the case of an individual, the principal process is bankruptcy.

The impacts of a party to a personal injury claim entering into an insolvency process are often profound and the bulk of this Practice Note focuses on those impacts.

Insolvency of the claimant

The general rule—bankrupt claimant no longer owns personal injury claim

When an individual is made bankrupt, the Official Receiver is appointed as the Trustee in Bankruptcy (TiB) of the bankrupt’s estate. The creditors will thereafter, in most cases, seek to appoint an insolvency practitioner as the TiB.

The