Not bonding for charged assets

In most case types (CVAs and IVAs have their own twist) the Insolvency Practitioners Regulations say that you should bond for “the value of the insolvent's assets as estimated by the insolvency practitioner as at the date of his appointment but ignoring the value of any assets - 
(a) charged to a third party to the extent of any amount which would be payable to that third party; or
(b) held on trust by the insolvent to the extent that any beneficial interest in those assets does not belong to the insolvent.”

This means that, apart from any amounts needed to pay preferential creditors or unsecured creditors under the prescribed part, you do not need to bond for charged assets.

We are still seeing IPs obtain bonds for high values where the assets are fully charged and a much lower, and therefore cheaper, bond would have been adequate. You will be criticised if you increase costs unnecessarily, so please ensure that your bond calculation sheet includes reference to excluding charged assets, except to the extent that they are needed for preferential creditors or the prescribed part.