Who Benefits from Bankrupt’s Disablement Insurance?

Cork v Rawlins (CA TLR 15 March)

Although the proceeds of a tortious claim for damages for pain and suffering are personal to the bankrupt and do not vest in his trustee, a contractual claim for money payable on disablement under two insurance policies did fall into the bankrupt’s estate and was divisible among his creditors. There is no authority for an asset to which the bankrupt was contractually entitled being excepted from his estate. The policies were assets purchased through premiums which otherwise would have formed part of the bankrupt’s estate available to his creditors. Although the court had considerable sympathy with the bankrupt, the policy of the Insolvency Act 1986 was to return to the unfortunate creditors who gave credit to the bankrupt as much of what they were owed as could be realised out of the bankrupt’s estates.