Application of post insolvency funds?

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2 min read

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 funds “held by the company to the credit of its customers” it was intended only to include sums actually due to customers at the date of insolvency and not funds which might become due in future and so any surplus should be paid to the company.

The costs of the application and the customers’ representative were ordered to be paid from trust assets and similarly any fees and expenses incurred by the administrators in relation to the administration of the trust assets (as opposed to the assets of BetIndex) were ordered to be paid out of the trust assets in line with the principles in Re Berkeley Applegate.

Adrian Hyde, Richard Toone and Adrian Rabet (joint administrators of BetIndex Limited) [2021] EWHC 1542 (Ch)

 

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