Blankstone Sington Limited (In Special Administration), Re

In approving a distribution plan under the Investment Bank Special Administration Regulations 2011, the court must decide for itself whether the plan is fair and reasonable for returning client assets. It gives particular weight to approval by the creditors’ committee, the absence of client objections, regulatory views and the administrators’ professional judgment.

The inherent jurisdiction to supervise trusts permits a Benjamin order authorising distribution on assumed facts. It does not permit the court to impose a bespoke procedure for resolving beneficiaries’ disputes. That procedural question is governed by CPR Part 64.

Blankstone Sington Limited, an investment bank in special administration, held client assets of approximately £271.6 million for about 1,200 clients and client money subject to the statutory trust regime in CASS 7.

The administrators and the company sought approval of a distribution plan for client assets and directions concerning the client money pool. The proposed arrangements included transfers to a nominated broker, treatment of late claims, and procedures for disputed claims. The central issues were whether the plan was fair and reasonable, whether an FCA waiver removed the need for client consent to transfer the client money pool, and how far the court’s inherent trust jurisdiction extended in relation to disputed client money entitlements.

1. Client assets. The court approved the distribution plan. Under the Investment Bank Special Administration Regulations 2011, the relevant objective is the prompt return of client assets. The court must be satisfied that the plan provides a fair and reasonable means of distribution. It must exercise its own judgment, but should give particular weight to the administrators’ professional judgment, approval or non-objection by the creditors’ committee, client representations, and the FCA’s position (paras 9, 22–26).

2. The absence of opposition was significant. The creditors’ committee had approved the plan, notice requirements had been met, no client had objected, and the FCA and FSCS did not oppose it. The proposed equal allocation of costs, subject to a cap and structured to preserve maximum FSCS compensation, was fair in the circumstances (paras 23–25).

3. Client money and FCA waiver. The client money pool was governed by a separate regime. The court agreed with the approach in Re SVS Securities PLC: the FCA waiver modified the statutory trusts so that client consent was no longer a condition of the administrators’ power to transfer the pool to another firm for safekeeping (paras 10–14, 27).

4. Inherent jurisdiction. The court may make a Benjamin order authorising trustees to distribute trust property on assumed facts. Such an order protects the trustee while preserving the beneficiary’s rights and does not vary beneficial interests (paras 12, 29–30). The jurisdiction permits a beneficiary to be required to commence proceedings by a specified time if the trustee is to distribute on the assumption that no valid claim exists.

5. That jurisdiction does not permit the court to devise or impose a special method for resolving the beneficiary’s substantive dispute. The applicable procedure is provided by CPR Part 64. The proposed requirement that rejected client-money claims be brought under the IBSA Regulations within 21 days therefore went too far and was ordered to be removed (paras 28–32).

6. Subject to the amendments discussed with counsel, the distribution plan and proposed order were approved (para 33).

First-instance decision. The judgment does not state any prior appellate history.