Colleagues of Conyers LLP have made available for download their article, “Guidance For Trustees Dealing With Insolvent Trusts: The Z Trust Cases,” published in JDSUPRA. The abstract is as follows:
In October 2022, the Privy Council delivered its judgment in the Z Trust case of Equity Trust (Jersey) Ltd (Respondent) v Halabi (in his capacity as Executor of the Estate of the late Mdam Intisar Nouri) (Jersey) which was consolidated with ITG Ltd and others (Respondents) v Fort Trustees Ltd and another (Appellants) (Guernsey). The Privy Council considered the nature and scope of the right of a former trustee to recover from or be indemnified out of assets of an insolvent trust in respect of liabilities and other expenditures properly incurred by the trustee. The Privy Council held that the rights of indemnity of successive trustees against the assets of an insolvent trust fund (i.e. a trust fund that is unable to meet those liabilities) rank pari passu and not on a first in time basis. This decision is one of the first to discuss the general principles under the English and Jersey law in the context of an insolvent trust and to consider the ranking as well as the nature of the trustee’s proprietary interests.
Whist the case concerns trusts established under the laws of Jersey, the decision is expected to have a great impact on trusts established in other common law jurisdictions and can give guidance to current or former trustees of offshore trusts and creditors.
Click here to view Conyer LLP’s summary of “Guidance for Trustees Dealing With Insolvent Trusts: The Z Trust Cases”
Posted by Melissa Zheng, Associate Editor, Wealth Strategies Journal.