PPI Claims in Trust Deeds: IP’s not likely to Re-open Cases

The Director of Insolvency for the Institute of Chartered Accountants of Scotland (ICAS), has said he believes Insolvency Practitioners are unlikely to try and reopen closed Protected Trust Deeds to pursue claims for mis-sold PPI (payment protection insurance).

The opinion expressed in his blog comes in light of the decision of Lady Dorrian in the case of Doneen Ltd & Others v Mond.

The decision of the Inner House of the Court of Session held in that case that Insolvency Practitioners may not be able to re-open cases depending on the wording of the Trust Deed. The case revolved around the issue of whether the effect of a discharge of a trustee in a protected trust deed and a final distribution to creditors was the equivalent of a discharge in composition, which would have the effect of extinguishing not only the debtor’s liability for the debt, but the debt itself. The court found it may do so, depending on the actual wording of the protected trust deed.

It is important to note that this decision does not affect Scottish bankruptcies, where it is clear it is possible for trustee’s to re-open the case to ingather assets that would have vested with the Trustee in bankruptcy, had they been known about prior to the trustee obtaining their discharge.

It is likely the decision in Doneen Ltd & Others v Mond, will be appealed to the UK Supreme Court.

A seperate case, Donnelly v RBOS, remains on appeal to decide whether banks can set off PPI claims where the claimant had previously granted a Trust Deed and the Deed is now closed.