Case study: Returning client assets

This case study looks at an application by Joint Special Administrators to approve a distribution plan for the return of assets belonging to clients of an investment bank, which was in special administration, by way of a transfer to a new owner of the custodian subsidiary which held the assets as trustee.

In the recently reported case of Hume Capital Securities PLC (acting by its Joint Special Administrators, Julien Irving, Mark Colman and Andrew Duncan of Leonard Curtis), an investment bank (within the definition in the Banking Act 2009 s.232) traded in both fund management and wealth management.


Hume Capital Securities PLC had incurred losses during 2015. In March 2015 trading in its shares was suspended and it agreed with the Financial Conduct Authority to stop carrying on regulated activities, except in relation to the settlement of existing contracts.

Upon their appointment, the Special Administrators sought to meet their objectives under the Regulations which included ensuring the return of client assets as soon as reasonably practicable. Under reg.10(5) the "return of client assets" included the investment bank relinquishing control over the assets for the benefit of the client to the extent of the client's beneficial entitlement to those assets.

With assistance from DWF, the Special Administrators actioned a distribution plan to return client assets in accordance with The Investment Bank Special Administration (England and Wales) Rules 2011. The distribution plan did not involve "partitioning" of the assets which, in the case of this investment bank, would have been time-consuming, expensive and possibly unworkable, but instead through an acquisition of the business by a third party (being a regulated investment manager) which would include acquiring the custodian subsidiary.

The plan was approved by the special administration creditors’ committee. The FCA and clients that had been notified of the plan did not object; with those clients that did not consent to the transfer to the new investment manager being offered the alternative of their assets being held via a trust under the control of the administrators.

Accordingly, the Special Administrators applied for the Court’s permission to action the distribution plan.


The Court approved the distribution plan and with no specific guidance under the Regulations, the Court relied on a number of factors to come to its conclusion. Notably, the Court held that the plan was “a highly convenient method of achieving the objective of returning client assets”.

There have been a very limited number of special administrations since MF Global UK and the distribution plan actioned in this case provides an innovative and cost efficient method for returning client assets.

For further information on this subject, please contact Martyn Kolankiewicz.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Martyn Kolankiewicz


I am a director in the Business Restructuring team. I undertake advisory work for banks, financial institutions, companies and directors on all issues arising out of restructuring distressed businesses. I have been retained by many boards of directors to advise them on their duties in high profile and complex assignments.