Insolvency Act 1986, section 306A

Property subject to restraint order

Part IX Bankruptcy

(1)This section applies where—

(a)property is excluded from the bankrupt’s estate by virtue of section 417(2)(a) of the Proceeds of Crime Act 2002 (property subject to a restraint order),

(b)an order under [F789 section 50, 67A, 128, 131A, 198 or 215AF789] of that Act has not been made in respect of the property, F790...

(c)the restraint order is discharged [F791 , and

(d)immediately after the discharge of the restraint order the property is not detained under or by virtue of section 44A, 47J, 122A, 127J, 193A or 195J of that Act.F791]

[F792 (2)The property vests in the trustee as part of the bankrupt's estate.F792]

(3)But subsection (2) does not apply to the proceeds of property realised by a management receiver under section 49(2)(d) or 197(2)(d) of that Act (realisation of property to meet receiver’s remuneration and expenses).F788]

Cases considering section 306A 3

Adrian Hyde v Geoffrey Lee Stunt

[2024] EWHC 630 (Ch) · 22 March 2024Interprets

The court held that section 306A(2)(c) did not prevent property removed from a restraint order by variation from vesting in the trustee. The provision concerned property subject to the statutory exclusion while the restraint applied. (see paras [21]-[22])

Lewis & Anor v Metropolitan Property Realisations Ltd

[2009] EWCA Civ 448 · 12 June 2009

The provision was considered as part of the Act’s usage of “realise” and its derivatives. Collectively, those usages generally indicated a completed conversion into distributable or usable cash (see para [17]).

Patel & Anor v Barlows Solicitors (a firm) & Ors

[2020] EWHC 2753 (Ch) · 16 October 2020

The provisions were considered in assessing whether the Crown had priority over the negligence claim and its proceeds. The court concluded that the Crown did not have a superior right which justified treating the settlement fund as free bankruptcy assets (see para [41]).

What each judgment says about section 306A is in the case-law panel in the full Act.

Amendments and notes

5 notes from legislation.gov.uk

Amendments

  1. F788Ss. 306A-306C inserted (24.3.2003) by 2002 c. 29, ss. 456, 458(1)(3), Sch. 11 para. 16(3); S.I. 2003/333, art. 2, Sch. (subject to arts. 3-13 (as amended by S.I. 2003/531, arts. 3, 4)); S.S.I. 2003/210, art. 2, Sch. (subject to arts. 3-7)
  2. F789Words in s. 306A(1)(b) substituted (1.6.2015 for specified purposes, 1.3.2016 in so far as not already in force) by Policing and Crime Act 2009 (c. 26), s. 116(1), Sch. 7 para. 54(2)(a); S.I. 2015/983, arts. 2(2)(e), 3(g); S.I. 2016/147, art. 3(i)
  3. F790Word in s. 306A(1)(b) repealed (1.6.2015) by Policing and Crime Act 2009 (c. 26), s. 116(1), Sch. 8 Pt. 4; S.I. 2015/983, art. 2(2)(f)
  4. F791S. 306A(1)(d) and word inserted (1.6.2015 for specified purposes, 1.3.2016 in so far as not already in force) by Policing and Crime Act 2009 (c. 26), s. 116(1), Sch. 7 para. 54(2)(b); S.I. 2015/983, arts. 2(2)(e), 3(g); S.I. 2016/147, art. 3(i)
  5. F792S. 306A(2) substituted (1.6.2015) by Policing and Crime Act 2009 (c. 26), s. 116(1), Sch. 7 para. 54(3); S.I. 2015/983, arts. 2(2)(e), 3(g)