Application Of Post Insolvency Funds?

• Published date: 11 August 2021
• Subject Matter: Corporate/Commercial Law, Insolvency/Bankruptcy/Re-structuring, Corporate and Company Law, Insolvency/Bankruptcy
• Law Firm: Mills & Reeve
• Author: Mr Jamie Wheatley

BetIndex maintained a separate client account for its gambling customers. On administration around '4.5m was in the account. The administrators applied for directions as to the way in which amounts due to each customer are calculated.

BetIndex's business model meant that contracts between customers and BetIndex remain in place so that customers continued to be entitled to ongoing winnings for up to 3 years after BetIndex stopping trading. Following administration, customers' winnings continued to accrue at a rate of about '500,000 per month.

The questions arising on the application were:

• Should trust assets be distributed now or when all rights to customers' winnings expire in 3 years' time?
• If funds are distributed now, what is the date at which entitlements of the customers should be calculated?
• Should the calculation take into account future winnings?
• If there is a surplus should it be paid to the company or be retained in the trust to meet the future obligations to pay customers?

The court concluded that:

• On the construction of the trust deed, payments should be made as soon as practically possible after insolvency.
• As the trust deed referred to 'Customer Funds' as...