The court was asked whether a clause in a settlement agreement relieving the paying party from its obligation to make payment to the receiving party in the event of the latter’s insolvency infringed the so-called anti-deprivation principle that prevents the making of a valid contract by which a man’s property is to remain his until bankruptcy but is on such event to pass to someone else and so be taken away from his creditors.
Held: It was a naked attempt to provide that the obligation to pay was to be extinguished if payment would be available for creditors generally in the event of insolvency: ‘This is not a commercial purpose so much as a collateral device to avoid the consequences of the insolvency legislation.’
Sedley, Rimer, Sullivan LJJ
[2011] EWCA Civ 328
Bailii
England and Wales
Cited by:
Cited – Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd and Another SC 27-Jul-2011
Complex financial instruments insured the indebtedness of Lehman Brothers. On that company’s insolvency a claim was made. It was said that provisions in the documents offended the rule against the anti-deprivation rule. The courts below had upheld . .
Lists of cited by and citing cases may be incomplete.
Insolvency
Updated: 09 November 2021; Ref: scu.431606
