Application of trust monies in administration (Re Safe Hands Plans Ltd (in administration))

Article summary

Restructuring & Insolvency analysis: A funeral plan provider in administration, which held plan subscription monies on trust, had insufficient funds to meet its obligations to plan members. A third party arranged funerals for certain plan members, initially for free but subsequently to be paid for out of the trust monies subject to court approval. Other plan members, whose dividends would be reduced as a consequence of the arrangement, argued that the general power of appointment of trust monies in the trust deed did not apply in an insolvency scenario and that the trust monies should be distributed pari passu. The court, in a detailed analysis of the terms of the trust deed, held that the arrangement with the third party fell within the trust powers. While emphasising the interpretative principle of adherence to the words themselves, the court construed the terms of the trust in a way that reflected the particular imperatives of the situation (including, for...