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Confiscation v Liquidation and/or Bankruptcy

The key provisions of PoCA relating to Liquidation and/or Bankruptcy are s.84(2)(d) which provides that “references to property held by a person include references to property vested in his trustee in bankruptcy or liquidator…”, s.417(2) which provides that “property for the time being subject to a restraint order… before the order adjudging the person bankrupt” is excluded from a person’s estate for the purposes of Part 9 of the Insolvency Act 1986, and s.9(2) which relates to priority obligations including preferential debts.

In practical terms, a confiscation order does not stop an Official Receiver or Trustee in Bankruptcy dealing with company property whether made before or after a winding-up or bankruptcy order. However, if a Restraint Order has been made or a Receiver appointed in connection with the enforcement of a confiscation order, then the Official Receiver and/or Trustee will be unable to deal with the company or bankrupt’s property. There are other exceptions in the case of Liquidation, including where the Court has lifted the corporate veil; however, these are beyond the scope of this article.

Legislation and case law in this area is dense and its practical application is fraught with difficulty. All of this complexity and difficulty creates space for creative and tactical manoeuvring.

In a recent case, IKP Solicitors acted for a bankrupt Defendant. Solicitors for a Trustee in Bankruptcy applied to vary an all-assets Restraint Order to secure transfer of funds to their clients account. IKP Solicitors opposed the application as unlawful. The Court agreed with IKP Solicitors and the application was refused.

The relationship between Confiscation and Liquidation and/or Bankruptcy and/or Individual Voluntary Arrangements, although outwardly simple, is intricate and complex. It is imperative that Defendants are represented by genuine PoCA experts.

The PoCA and Financial Crime department at IKP Solicitors, led by James O’Hara and Paul O’Donnell, possess the necessary subject matter expertise to assist Defendant’s to navigate the complexities of any PoCA case and compliments his expertise with a bank of trusted expert Counsel and consultants. Both James and Paul are members of an elite group of Solicitors in the UK ranked by Chambers and Partners in the area of ‘PoCA Work & Asset Forfeiture’.


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