Insolvency Act 1986, section 298

Removal of trustee; vacation of office

Part IX Bankruptcy

(1)Subject as follows, the trustee of a bankrupt’s estate may be removed from office only by an order of the court or by a [F758decision of the bankrupt's creditors made by a creditors' decision procedure instigatedF758] specially for that purpose in accordance with the rules.

F759(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)F760. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)Where the official receiver is trustee by virtue of [F761section 291A(1)F761] or a trustee is appointed by the Secretary of State or (otherwise than under [F762section 291A(2)F762] ) by the court, a [F763creditors' decision procedure may be instigatedF763] for the purpose of [F764removingF764] the trustee only if—

(a)the trustee thinks fit, or

(b)the court so directs, or

(c)F765... one of the bankrupt’s creditors [F766so requests,F766] with the concurrence of not less than one-quarter, in value, of the creditors (including the creditor making the request).

[F767 (4A)Where the bankrupt's creditors decide to remove a trustee, they may in accordance with the rules appoint another person as trustee in his place.

(4B)Where the decision to remove a trustee is made under subsection (4), the decision does not take effect until the bankrupt's creditors appoint another person as trustee in his place.F767]

(5)If the trustee was appointed by the Secretary of State, he may be removed by a direction of the Secretary of State.

(6)The trustee (not being the official receiver) shall vacate office if he ceases to be a person who is for the time being qualified to act as an insolvency practitioner in relation to the bankrupt.

(7)The trustee may, in the prescribed circumstances, resign his office by giving notice of his resignation to the [F768prescribed personF768] .

(8)The trustee shall vacate office on giving notice to the [F768prescribed personF768] that [F769the trustee has given notice under section 331(2).F769]

[F770 (8A)A notice under subsection (8)—

(a)must not be given before the end of the period prescribed by the rules as the period within which the bankrupt's creditors may object to the trustee's release, and

(b)must state whether any of the bankrupt's creditors objected to the trustee's release.F770]

(9)The trustee shall vacate office if the bankruptcy order is annulled.

Cases considering section 298 5

Donaldson v O'Sullivan

[2008] EWCA Civ 879 · 30 July 2008

Provides the statutory framework for removal of a trustee in bankruptcy. The Court of Appeal treats removal and replacement as connected matters within the court-controlled bankruptcy process. (see paras [14], [21], [43]) Confirms that a trustee may be removed by court order or special creditors’ meeting. The provision does not prevent the court appointing a replacement once removal has occurred. (see paras [14], [41], [43]) Cited only. Confirms that a trustee wishing to resign may need to apply to the court for leave. The provision illustrates the statutory alternatives to a block transfer appointment. (see paras [14], [18], [21])

Miles & Ors v Price & Ors

[2019] EWHC 291 (Ch) · 15 February 2019Interprets

Interprets the power to remove a bankruptcy trustee as requiring assessment of the interests of the bankruptcy process as a whole, including whether replacement would improve the position of creditors. Removal was refused because it would create further disruption and cost without practical benefit (see paras [50]-[55]; [58]-[64]; [81]). Applies the statutory framework governing removal of a court-appointed bankruptcy trustee through a creditors’ decision procedure. The court held that the applicants had not complied with the applicable procedural requirements and that a meeting would in any event lack practical utility (see paras [98]-[109]). Applies the requirement that a creditor’s request for a decision procedure must have the concurrence of creditors representing at least one-quarter in value. The applicants’ claims did not reach that threshold on the available proofs (see paras [100]; [108](i)). Confirms that removal following a creditors’ decision does not take effect until another trustee is appointed. This supported the concern that a meeting could leave the bankruptcy without an available replacement trustee (see para [108](v)).

Donaldson v O'Sullivan

[2008] EWHC 387 (Ch) · 29 February 2008

The court confirms that section 298(1) permits removal of a trustee in bankruptcy by court order. Removal is justified where a creditors’ meeting would serve no useful purpose. (see paras [9]-[12])

What each judgment says about section 298 is in the case-law panel in the full Act.

Amendments and notes

15 notes from legislation.gov.uk

Amendments

  1. F758Words in s. 298(1) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 77(2); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e)
  2. F759S. 298(2) omitted (6.4.2017 for E.W.) by virtue of Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 10 para. 9(2); S.I. 2016/1020, reg. 4(f)
  3. F760S. 298(3) repealed (1.4.2004) by 2002 c. 40, ss. 269, 278, 279, Sch. 23 para. 10, Sch. 26 (with s. 249(6)); S.I. 2003/2093, art. 2(2), Sch. 2 (subject to arts. 3-8 (as amended by S.I. 2003/2332, art. 2))
  4. F761Words in s. 298(4) substituted (6.4.2017 for E.W.) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 10 para. 9(3)(a); S.I. 2016/1020, reg. 4(f)
  5. F762Words in s. 298(4) substituted (6.4.2017 for E.W.) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 10 para. 9(3)(b); S.I. 2016/1020, reg. 4(f)
  6. F763Words in s. 298(4) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 77(3)(a); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e)
  7. F764Word in s. 298(4) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 77(3)(b); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e)
  8. F765Words in s. 298(4)(c) omitted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force) by virtue of Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 77(3)(c)(i); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e)
  9. F766Words in s. 298(4)(c) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 77(3)(c)(ii); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e)
  10. F767S. 298(4A)(4B) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 77(4); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e)
  11. F768Words in s. 298(7)(8) substituted (6.4.2016) by Enterprise and Regulatory Reform Act 2013 (c. 24), s. 103(3), Sch. 19 para. 23; S.I. 2016/191, art. 2 (with art. 3)
  12. F769Words in s. 298(8) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 77(5); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e)
  13. F770S. 298(8A) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 77(6); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e)

Modifications

  1. C1000Ss. 298–307 applied (with modifications) by S.I. 1986/1999, art. 3, Sch. 1 Pt. II (as amended (6.4.2016) by The Enterprise and Regulatory Reform Act 2013 (Consequential Amendments) (Bankruptcy) and the Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) Regulations 2016 (S.I. 2016/481), reg. 1, Sch. 2 para. 2(7)(c))
  2. C1001S. 298 modified (1.12.1994) by S.I. 1994/2421, art. 11(2)(3), Sch. 7 para. 15 (as amended (8.12.2017) by The Insolvency (Miscellaneous Amendments) Regulations 2017 (S.I. 2017/1119), reg. 1(1), Sch. 2 para. 7(3); and (23.7.2019) by The Small Business, Enterprise and Employment Act 2015 (Consequential Amendments, Savings and Transitional Provisions) Regulations 2019 (S.I. 2019/1058), regs. 1, 3(2))