Voluntary arrangement creates a trust

Shierson v Tomlinson (CA TLR 11 April, The Independent 16 April)

Where money or assets are to be held for the benefit of creditors under a voluntary arrangement then a trust is created. If the arrangement provides for what is to happen in the event of liquidation or bankruptcy or a failure of the arrangement, effect must be given to that provision. If the arrangement does not so provide, the trust continues despite the liquidation or bankruptcy and takes effect according to its terms. The creditors could prove in the liquidation or bankruptcy for so much of their debt as remained after payment under the trust.