Successor IP? A new route to claim on your predecessor’s bond

When a successor office holder identifies that an estate may have suffered loss because of a predecessor’s conduct, accessing the IP bond has not always been straightforward.

A recent decision has now clarified the position significantly.

The decision: Nicholson v IPA

In March 2026, HHJ Rawlings handed down judgment in Nicholson and another v Insolvency Practitioners Association and others [2026], providing important clarity on the legal status of IP bonds and the rights of successor office holders.

The claimants were successor liquidators of three companies. They alleged their predecessors caused loss to the estates through the dishonest practice of “time dumping” — claiming for time not spent on the insolvencies, resulting in excessive charges.

The Insolvency Practitioners Association (IPA), as the predecessors’ recognised professional body (RPB), was the named beneficiary of the IP bonds issued by Intact Insurance. The successor IPs were unable to reach agreement with the surety on quantum, and the IPA hadn’t assigned the bond rights, resulting in an impasse.

Three key findings

1. The RPB’s role is contractual, not publicIt was argued that any decision by the IPA regarding assignment was a public law function amenable to judicial review. The court disagreed. Legislation doesn’t require an RPB to be the bond beneficiary and, in practice, the RPB doesn’t investigate claims or hold bond proceeds. Its powers derive from the bond contract itself.

2. IP bond claim rights are held on trust for the estateConstruing the bond wording alongside section 390(3) of the Insolvency Act 1986, the Insolvency Practitioners Regulations and the Memorandum of Understanding (MOU) between RPBs and the Secretary of State, the court found a clear intention that the RPB holds claim rights for the benefit of estates that have suffered loss. The bonds aren’t for the RPB’s own benefit. Liability is measured by reference to estate losses and the bond funds successor IPs’ reasonable costs of proving claims. Recognising a trust was necessary to give effect to the statutory security purpose under section 390(3).

3. The court can order transfer of intangible rights under section 234(2) of the Insolvency Act 1986This resolved a long‑standing uncertainty. Earlier authority (Welsh Development Agency) cast doubt on whether section 234 applied to choses in action. The court concluded, on its own analysis, that those restrictive comments related to subsections (3) and (4) — which deal with seizure and disposal — and didn’t extend to subsection (2), which contains no similarly restrictive language.The wide definition of “property” in section 436 of the Insolvency Act 1986, which expressly includes things in action, therefore applies to section 234(2). The court ordered assignment of the claim rights to the successor liquidators.

Practical steps for successor IPs

Where a successor office holder considers that an estate has suffered loss through a predecessor’s fraud or dishonesty, the following route is now available:

• Ask the RPB to assign the bond claim rights to you as successor
• It’s not necessary for the RPB to have reached a disciplinary finding, and the surety doesn’t need to have agreed quantum
• If assignment isn’t forthcoming, you can ask the court to order transfer under section 234(2) of the Insolvency Act 1986.

As successor office holder, you hold the statutory powers of investigation and the duty to pursue recoveries for creditors’ benefit. The bond provides for your reasonable costs of proving and pursuing the claim, with any proceeds applied through the insolvency waterfall in the usual way.

Wider significance

For successor office holders, the decision provides a clear and enforceable mechanism to access bond protection where an estate has suffered loss through a predecessor’s conduct.