High Court decision clarifies status of Insolvency Practitioner bonds

2 April 2026

Last week (24 March), the High Court of Justice (Business and Property Court, Birmingham) handed down an important judgment by His Honour Judge Rawlings on the legal status of Insolvency Practitioner (IP) bonds. These bonds are held by the Insolvency Practitioners Association (IPA) as the named beneficiary, including the right to claim for losses suffered by insolvent estates arising from fraud or dishonesty by an IP.
 
The judgment provides welcome clarity for the insolvency profession. It confirms that:

• The IPA enters into bonds to benefit third parties – specifically, the insolvency estates that may suffer loss due to an IP’s fraud or dishonesty.
• The IPA itself has no right to benefit from the bonds but can assign rights under the bonds to a successor IP.
• Any successor IP receiving an assignment will hold those rights for the benefit of the affected insolvency estate(s).

 The Court also clarified that:

• Through its memorandum of understanding with the Secretary of State, the IPA enters into the bonds expressly to benefit insolvency estates.
• As a result, the IPA holds the rights under the bonds on trust for the relevant estate(s).
• This trust arrangement is a practical necessity to ensure that the estates – the true beneficiaries – can enforce claims under the bonds when needed.

The full judgment is now available: Nicholas Nicholson (in his capacity as sole liquidator of F.W. Mason & Sons Ltd (in liquidation), Nicholas Nicholson and Russell Parkin (as joint liquidators of Ugo Stores Ltd and William Sessions Ltd (both in liquidation)) v Insolvency Practitioners Association and ors [2026] EWHC 686 (Ch).