Q&As

When money is placed into an escrow account, what is the effect in the event the payer enters an insolvency process?

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Published on LexisPSL on 21/04/2017

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • When money is placed into an escrow account, what is the effect in the event the payer enters an insolvency process?

When money is placed into an escrow account, what is the effect in the event the payer enters an insolvency process?

An escrow account is an interest-bearing bank account to which certain specified criteria are attached which must be satisfied before funds can be released from the account. These conditions will be set out in the associated escrow agreement.

The money in an escrow account is held on trust by the escrow agent. In the event of the debtor’s insolvency, trust property would not normally be included in the assets available for distribution to creditors.

Money held by a stakeholder in escrow is not an asset available to the liquidator or administrator. The stakeholder is contractually

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