The anti-deprivation rule (“ADR”) of corporate insolvency is of immense interest in banking and finance because it limits the effectiveness of contractual clauses found in the documentation of finance products. The effectiveness and validity of various clauses like the flip clause which switches the priority between secured parties in a synthetic securitisation all depend on whether the clauses infringe upon the ADR.

While laying down some guidelines for the ascertaining compliance with the ADR, the UK Supreme Court in Belmont Park Investments Pty Ltd v. BNP Corporate Trustee Services [2011] UKSC 38 (“Belmont Park”) did not sufficiently clarify the principles behind the ADR. Using Belmont Park as the platform, the proposed paper explores the policies and the structure of English corporate insolvency law, with a view to identifying the theoretical underpinnings of ADR and the basis of interfering parties’ freedom of contract. As a common law rule, the paper will inform the resolution of similar issues which may arise in other common law jurisdictions like Singapore, Malaysia and Hong Kong.