Global Trader Europe Ltd, Re [2009] EWHC 602 (Ch) (24 March 2009)

Only sums actually segregated in the client money account at the time of administration are held on trust for the Crawford-Brunt class; incomplete transfers and post-administration credits do not attract trust protection and are unsecured claims. Rossib and Soukholinski classes do not have proprietary claims over general funds as their monies were not segregated and the opt-out from client money rules was ineffective, but absent tracing, their remedy is as unsecured creditors. The CFM class is correct that general funds are not subject to proprietary claims by other classes.

Citation: [2009] EWHC 602 (Ch)
Parties: Applicant (liquidator): Joanne Milner; Applicant (liquidator): Stephen Cork; First Respondent (representative of Crawford Brunt Class): Andre Crawford-Brunt; Second Respondent (representative of Rossib Class): Rossib (Cyprus) Limited; Third Respondent (representative of Soukholinski Class): Sergey Soukholinsky; Fourth Respondent (representative of CFM Class): City Facilities Management Limited
Jurisdiction: England and Wales
Judgment Date: 24 March 2009
Procedural Posture: Insolvency Application Under Insolvency Act 1986, S.112 / Judgment on Liquidators' Application for Directions Regarding Distribution of Client Money and Creditor Claims
Outcome: Application determined with directions; proprietary claims by Rossib and Soukholinski classes rejected; trust protection limited to segregated funds for Crawford-Brunt class; other claims rank as unsecured.
Legal Topics: Client Money Rules, Statutory Trust, Distribution of Assets in Liquidation, Classification of Clients, Proprietary Claims Vs Unsecured Creditor Claims, Regulatory Compliance (fsa/cass)

Insolvency Law Financial Regulation Client Money Rules Statutory Trust Distribution of Assets in Liquidation Classification of Clients Proprietary Claims Vs Unsecured Creditor Claims Regulatory Compliance (fsa/cass)

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Parties

Joanne Milner

Applicant (liquidator)

Stephen Cork

Applicant (liquidator)

Andre Crawford-Brunt

First Respondent (representative of Crawford Brunt Class)

Rossib (Cyprus) Limited

Second Respondent (representative of Rossib Class)

Sergey Soukholinsky

Third Respondent (representative of Soukholinski Class)

City Facilities Management Limited

Fourth Respondent (representative of CFM Class)

Procedural Posture

Insolvency Application Under Insolvency Act 1986, S.112 / Judgment on Liquidators' Application for Directions Regarding Distribution of Client Money and Creditor Claims

Legal Issues

1 Whether sums held in segregated accounts are held on trust for specific classes of clients or all clients
2 Whether incomplete transfers to segregated accounts prior to administration confer trust protection or only unsecured creditor status
3 Whether post-administration credits to client accounts are subject to trust protection

Ratio Decidendi

Court Disposition

Application determined with directions; proprietary claims by Rossib and Soukholinski classes rejected; trust protection limited to segregated funds for Crawford-Brunt class; other claims rank as unsecured.

Orders

Liquidators to distribute segregated account funds solely to Crawford-Brunt class.
No order for transfer of £503,157.55 to segregated account; claim ranks as unsecured.