CHAPTER 34
DISCLAIMERS
September 2008
INTRODUCTION
This chapter gives general advice and guidance relating to disclaimers, including matters to be taken into consideration before issuing a disclaimer, the effect of a disclaimer and the procedure for issuing a disclaimer.
In the general legal sense, a disclaimer is an act of renouncing one’s claim over property. In the more specific sense of insolvency legislation, a disclaimer is an act provided for in the legislation allowing a liquidator or trustee to renounce his/her claim over property vested in the insolvent’s estate, but only where the property brings with it some onerous obligation.
Whilst many assets with no value may simply be abandoned (as often happens with jewellery), this is simply not an option for those assets where ownership of the asset brings with it an onerous obligation; for example, an obligation to maintain a leasehold property or pay rent, or perform any other specific act. If the ability to issue a disclaimer were not available the only option for the liquidator or trustee would be to bring the obligation to an end by dealing with the property by way of transfer or sale thereby unnecessarily prolonging the administration of the estate, and adding costs and reducing the amount available to return to creditors.
Additionally, in a bankruptcy estate the property (and, therefore, the obligation) vests in the trustee personally; leaving the possibility of the trustee being personally liable for financial penalties relating to ownership of the asset.
The chapter contains a section of frequently asked questions (FAQs), which give an overview of the subject of disclaimers with links to the relevant part(s) of the chapter. The FAQs are intended to be a useful introduction to the subject, or to be used as a training tool, but should not be seen as a replacement for the more detailed advice given in the chapter
The Chapter is divided into the following parts:
Part 1 – Considering a disclaimer (paragraphs 34.3 to 34.36)
Part 2 – Notice to elect (paragraphs 34.37 to 34.51)
Part 3 – Procedure for disclaiming (paragraphs 34.52 to 34.67)
Part 4 – Effect of a disclaimer (paragraphs 34.68 to 34.84)
Part 5 – Vesting orders (paragraphs 34.85 to 34.93)
The Chapter contains the following annexes (amended February 2010):
Annex A – Frequently asked questions
Annex B - Document explaining purpose of disclaimer in German
Annex C - Document explaining purpose of disclaimer in French
Annex D - Document explaining purpose of disclaimer in Spanish
Annex E – English translation of Annexes B, C and D
[On to Part 1 – Considering a disclaimer]