Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Anti-deprivation principle definition

What does Anti-deprivation principle mean? A common law rule in insolvency practice that stops parties using insolvency‑triggered provisions to strip value from, or remove assets out of, an insolvent estate that should be available for creditors. It is not set out in statute; its scope and limits are defined by case law (including UK Supreme Court authority), which looks to substance over form and asks whether the provision is a bona fide commercial arrangement or an attempt to evade the insolvency regime. Key features: - Catches clauses, trusts or security terms that divest property on bankruptcy, liquidation or administration. - Will not usually bite where the...

Anti-deprivation and pari passu principles: scope, defences, overlap and leading cases in insolvency

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

This Practice Note explores the Anti-deprivation principle (ADP), the Pari passu principle (PPP) and how these principles diverge.

The anti-deprivation principle

The ADP is a rule designed to stop parties contracting out of the statutory framework for the collection, realisation and distribution of an insolvent estate. It bars the removal of assets that ought to sit within that estate. In this way, it safeguards the estate’s value against attempts to bypass Insolvency laws and works to ensure an insolvent estate is not deprived of property that would otherwise be available for its creditors.

History

The ADP has its origins in the old common law Rules of bankruptcy. Although it was once labelled a fraud on the bankruptcy laws, it is now known as the ‘anti-deprivation principle’.

Case law

Having fallen into relative obscurity, the ADP re-emerged in a number of significant judgments. It has been examined and applied in disputes concerning:

the interpretation of security notes issued by special purpose vehicles
the construction of interest rate swaps and forward freight agreements governed by the 1992 ISDA...

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Jessica Powers

New Square Chambers

Jessica specialises in insolvency, commercial and company law. She appears as sole counsel regularly in the High Court, and was successful in the Court of Appeal in the important case of Bell v Ide. She is well accustomed to conducting cases from pre-action advice through to trial, whilst throughout maintaining a pragmatic and commercial approach. Jessica is currently ranked in Legal 500 UK Bar in Insolvency, Commercial Litiation and Company, and is noted as being an “excellent technical lawyer and advocate” and “very bright and hard-working”. She is also ranked in Chambers and Partners UK Bar in Insolvency, and has been described as “strong on her feet” and “a pleasure to work with”. During her appointment to the Attorney-General’s C Panel of Junior Counsel to the Crown (2017-2022), Jessica was frequently instructed by HMRC and the Official Receiver in insolvency matters, and by the...

Web page updated on 21/05/2026

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