High Court decision of the status of Insolvency Practitioner bonds

26 March 2026

This week the High Court of Justice, Business and Property Court, Birmingham, handed down a judgment by His Honour Judge Rawlings concerning the status of Insolvency Practitioner (IP) bonds (Bonds) which are held by the Insolvency Practitioners Association (IPA) as the named beneficiary of the rights under those Bonds, including the right to claim for losses suffered by insolvent estates as a result of fraud or dishonesty by an IP (Claim Rights).

The decision confirms that: 

• the intention of the IPA, in entering into the Bonds, is to benefit third parties, namely the insolvency estate(s) which may suffer loss as a result of fraud or dishonesty by the IPs who are party to the Bonds;
• the IPA has no right to benefit from the Bonds itself but is entitled to assign the rights under the Bonds to a successor IP of the relevant insolvency estate(s); and
• it is intended that any such assignee would themselves hold any rights assigned to them for the benefit of the insolvency estate(s) that suffered loss.

The decision also clarifies that:

• pursuant to entering into a memorandum of understanding (MoU) with the Secretary of State, the IPA enters into the Bonds to benefit the insolvency estate(s);
• as such, the IPA holds the rights on trust for the relevant insolvency estate(s) (Trust); and
• that Trust is a practical necessity in order to ensure that the beneficiary of the Bonds (i.e. the insolvency estate(s)) can enforce the Claim Rights.

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