In Malcolm Niekirk’s latest Coffee Break Briefing Webinar, he provided Insolvency Practitioners with some advice on Disclaimers.
In the session, he outlined what a disclaimer is, who can make one, how to go about it and more.
You can find a short summary below, or watch the video back in full here.
Short Summary
Disclaimer is a statutory right under the Insolvency Act 1986. It allows liquidators and trustees in bankruptcy to dump unprofitable contracts or other onerous property. Disclaimed assets leave the estate.
Disclaimer ends the interest the estate had in that property or contract. It doesn’t affect the rights of third parties. They may apply for a vesting order, to become the new owner of the property, but rarely do. Vesting orders are unlikely to affect you as liquidator or trustee.
Key points
- Disclaim onerous property by filling in the disclaimer document. Authenticate it and date it. Deliver it to anyone with an interest in the property.
- It’s only liquidators and trustees in bankruptcy who have a statutory right to disclaim.
- A carefully drafted VA proposal can dump unprofitable leases (for example), on economic terms similar to disclaimer.
- Ownership of disclaimed property doesn’t revert to the bankrupt. It becomes bona vacantia and vests in the Crown
- Unless it’s a solely owned freehold. Then it still vests in the Crown, but through escheat.
- In a bankruptcy, think before you disclaim the family home It’s probably better to re-vest it in the bankrupt.
- Disclaimer creates a claim in damages for breach of contracts. That can be a significant cost in an MVL.
- Disclaiming properties that a receiver or mortgagee might sell (for no benefit to the estate) may avoid the cost of CGT.
Upcoming events
Thanks for reading this short summary. You can watch the full, detailed webinar here.
My next Coffee Break Briefing will be on Monday 7th April. For event invites and updates straight to your inbox, please subscribe to our email list here.
And, we now have a date for our big annual Insolvency Conference – Friday 13th June. It’s taking place at the lovely Beaulieu Inn in the New Forest, and I do hope you can join me. We’ll be sending the invite out to the list shortly.
Specialist Insolvency Solicitors
If you have any questions after reading this article, please don’t hesitate to get in touch with our bright and experienced team.
Call us on 01202 499255, or fill out the form at the top of this page, for a free initial chat.
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