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March 2008
PART 1
Where a winding-up order is made by the court the official receiver has a statutory duty to investigate [note 1] –
a) if the company has failed, the causes of the failure; and
b) generally, the promotion, formation, business, dealings and affairs of the company. This applies to all cases including those where an insolvency practitioner is appointed liquidator by the court immediately on the making of the winding-up order [note 2] (see paragraph 3.14).
The official receiver may make a report to the court if he/she thinks fit, though this is carried out rarely. [note 3].
3.3 Official receiver as liquidator
The official receiver becomes liquidator immediately the winding-up order is made [note 4] (with the exceptions given in paragraph 3.14) and will remain so until someone else becomes liquidator. He/she also becomes liquidator during any subsequent vacancy. The official receiver has a duty to protect the company’s assets and, where appropriate, to take into custody or under his/her control all property, etc. to which the company is or appears to be entitled, to realise and distribute the same to the company’s creditors and, if there is a surplus, to the persons entitled to it [note 5].
3.4 Realisation of assets at the initial stage
There is no reason why the official receiver should not use his/her powers as liquidator to commence the realisation of assets, where the assets involved are easy to realise and, particularly, where an asset may be rendered valueless by the date of the first meeting, such as bulky items of stock which are expensive to store or small value bank balances held in accounts that incur charges. Even if the early realisation of an asset were to prejudice the appointment of an insolvency practitioner, the official receiver should act in the best interests of creditors and seek realisation.
See Chapter 31 for information on the realisation of assets
Where the official receiver needs to complete a contract as liquidator he/she does not need the sanction of court or liquidation committee to proceed. He may decide it is prudent to seek the views of the major creditors before proceeding. See also Chapter 31.6, Part 3 Work in progress and Chapter 62 – Carrying on a business.
3.6 Service standards - realisation of assets
The Service's Charter requires the official receiver to take steps to make contact with the director or relevant third parties to ascertain whether immediate action is required to collect, secure and protect and, where necessary, insure the assets of the company in liquidation including undertaking an inspection if necessary (see Chapter 8 – Inspections and The Insolvency Service Charter)
3.7 Meetings of creditors and contributories
The official receiver must consider at an early stage whether to summon separate meetings of creditors and contributories to appoint a liquidator in place of the official receiver except where a practitioner is appointed under section 140 [note 6] (see paragraph 3.14)
Although such decisions should be made promptly, the official receiver will need to obtain sufficient information relating to the company’s assets and liabilities from the company’s officers and the other sources listed in Part 3 of this chapter before he will be able to decide whether or not to hold a meeting. It is usual that the meeting decision is made when the Case Assessment Record (CAR) is completed.
3.8 Completion of the Case Assessment Record
It is expected that 80% of CAR A and CAR B forms will be submitted within 4 weeks (28 days) of the winding-up order, 95% within 6 weeks (42 days) of the winding-up order and 100% within 8 weeks (56 days). For further information on CAR forms see Chapter 15 – Aims and conduct of OR’s investigations and the CAR guidance notes on the OROS intranet site.
3.9 Secretary of State appointments
In certain circumstances it may be necessary to make application to the Secretary of State for the appointment of an insolvency practitioner as liquidator as a matter of urgency without holding a meeting of creditors and contributories. For more detailed information relating to meetings and the appointment of insolvency practitioners reference should be made to Chapter 16 - Meetings and Chapter 17 – Appointment of liquidators and trustees.
3.10 Report to creditors and contributories
The material obtained from the company’s officers and the organisations listed in Part 3 of this chapter will be the principal source of the information contained in the report to creditors and contributories [note 7].
Instructions for the completion of the report to creditors are contained in the Case Assessment Record Guidance Notes and further information relating to the report to creditors can be found in Chapter 18.
The official receiver must decide whether to require a statement of affairs [note 8] It is not usually the case that a statement of affairs will be required before the first interview with the director(s) and generally the information supplied in form PIQC relating to assets and liabilities will be used rather than a separate statement of affairs being required.
If the company has been subject to earlier insolvency proceedings a statement of affairs may have been prepared in relation to those proceedings.
Reference should also be made to Chapter 12 – Statements of affairs.
The official receiver is required to maintain a case file in respect of each winding up. The file is divided into ten parts and papers are filed within those parts as follows:
Preliminary examination papers
Further investigation
Court papers
Statutory notices
Correspondence
Meetings, reports to creditors, notices and proofs
Assets
Closing/IP handover
No longer used (previously long term realisations)
Miscellaneous
The filing code of practice is available on the Intranet (http://intranet/OROS/OROS/BooksPapers/BooksPaperHome.htm)
The official receiver must not disclose information about a case to any person who does not have a legitimate reason to have the details of the case - see Chapter 47 – Disclosure of information (including inspection and production of records).
3.14 Insolvency Practitioner appointed liquidator immediately
Where a winding - up order is made immediately upon the appointment of an administrator ceasing to have effect, or where there is a supervisor of a voluntary arrangement in office, the court may appoint the former administrator or supervisor as liquidator of the company [note 9].
In such circumstances, the official receiver remains under a statutory duty to investigate [note 10], to give notice of and gazette the order and to provide information to creditors and contributories [note 11]. Any inspection of the company’s books and papers will need to be made with the arrangement of the liquidator – possibly, by inspecting the records at their offices. The liquidator has a duty to co-operate with the official receiver’s investigations, including making company records available [note 12] [note 13]. The official receiver does not have to summon meetings of creditors and contributories or issue notice of no meeting [note 14]. Where a liquidator is appointed by the court in the circumstances mentioned, it is the liquidator’s duty to send forms of proof of debt. A proof of debt must be sent to any creditor of the company on request. The official receiver may encounter the involvement of insolvency practitioners in respect of other insolvency proceedings involving the company. Further information regarding these is available in Chapter 56. An insolvency practitioner in office will probably be a useful source of information regarding the company’s affairs – particularly at initial enquiry stage (see Part 2 of the Chapter).
[Back to Introduction] [On to Part 2 – Initial action and initial enquiries following notification of a winding-up order]