Ch 34: Disclaimers (September 2008)



April 2010


34.1 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.


34.1A Insolvency (Amendment) Rules 2010 – Transitional Provisions

The Insolvency (Amendment) Rules 2010 came into force on 6 April 2010 and have had some effect on disclaimer procedures. The amendments apply to cases where the petition was presented on or after 6 April 2010 (unless in a liquidation there was a voluntary winding up resolution or certain administration proceedings before this date). Full details of the transitional provisions can be found in schedule 4 to the Insolvency (Amendment) Rules 2010 and a summary is available at Annex F. For the purposes of this chapter reference will only be made to the petition date in the transitional provisions.

The relevant parts or paragraphs have been updated to reflect the rule changes from 6 April 2010 and information is provided to show when they apply. Due to the volume of changes in respect of the procedure for issuing disclaimers, part 3 of this chapter has been re-issued and the guidance therein should be applied to all post 6 April 2010 petition cases.

For cases where the petition was presented before 6 April 2010 the previous rules continue to apply and the guidance and advice in Technical Manual Chapter 34 Part 3 (issued September 2008) may be followed. Chapter 34 Part 3 (issue date September 2008) is attached at Annex G.


34.2 Background

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 / notice requiring disclaimer decision (paragraphs 34.37 to 34.51)

Part 3 – Procedure for disclaiming – post 6 April 2010 petition cases (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:

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

Annex F – Insolvency (Amendment) Rules 2010 - summary of transitional provisions

Annex G – Procedure for disclaiming – pre 6 April 2010 petition cases


[On to Part 1 – Considering a disclaimer]