July 2005

CASH

31.5.2 Dealings with cash - generally

Care must be taken when accepting any amount of cash, from bankrupts or directors of companies to ensure that there are no disputes about the amounts involved at a later date. Cash collected should be counted in the presence of the bankrupt or director and a receipt should be given for that amount, agreed in writing by the collector and the bankrupt or director. Ideally any cash handed over should be paid to the cashier in the presence of the bankrupt or director who should then be issued with a formal receipt. If this is not possible then the official receiver should place the cash in the office safe and issue a temporary receipt which should be witnessed by another staff member. A formal receipt should always be sent to the remitter as soon as possible. The amount of cash, together with any money retained by the bankrupt for his/her day to day living requirements, should also be detailed in any statement taken at this time. Wherever possible cash should be verified against balances in petty cash books or similar accounting records. Cash collected should not be disbursed or paid to creditors informally.

31.5.3 Cash in hand - bankruptcy

It is unlikely that a bankrupt will be holding large sums of cash when he/she attends for interview. A possible exception to this would be a bankrupt attending directly from court who has taken cash to the hearing in an attempt to settle with the petitioner, or who has taken more cash than was necessary to pay for presenting his/her own petition. The official receiver should ascertain the source of the monies as if these monies were provided by one or more third parties for specific purposes, they would not be regarded as being part of the bankrupt's estate. A loan to the bankrupt, whatever the source, would be part of the estate. The bankrupt should be allowed to retain sufficient cash for his/her day to day living requirements until he/she receives his/her next salary/benefit payment. In this regard the bankrupt should be asked to estimate the sum he/she needs, and to submit this estimate in writing. Generally cash representing benefits should not be removed from a bankrupt. A receipt should be issued if cash is collected from the bankrupt (see paragraph 31.5.2)

31.5.4 Cash in hand - no longer legal tender

British cash that is no longer legal tender such as £1 notes and old 5 pence pieces can be returned to the Bank of England who will exchange these items for their face value. This can be done in person at Exchanges, Bank of England, Threadneedle Street, London, EC2R 8AH or at the same address by post. Generally cash should not be sent through the post, and the official receiver should exercise his/her judgment when deciding whether to post such items.

If such items are collected from a bankrupt or director he/she should be issued with a receipt which should state that the items received are no longer legal tender (see paragraph 31.5.2)

31.5.5 Cash in hand - coin collections

Although the Bank of England will also exchange old British coins for their face value, in the case of a coin collection this is unlikely to be an appropriate way in which to realise such an asset. Steps should be taken to ensure that such items are adequately insured and a valuation of the collection should be obtained from a specialist in the field who may also be able to recommend an auctioneer to dispose of the items.

If such items are recovered during the insolvent's attendance at the office, they should be stored in the office safe, until being passed to an agent for disposal. The insolvent should be issued with a receipt for the collection, and where possible the receipt should contain a description of the items handed over although no attempt should be made to ascribe a value to the collection.

31.5.6 Cash in hand - foreign currency

Foreign notes can be exchanged in most high street banks, but it is unlikely that foreign coins can be realised in this way. Large quantities of foreign currency should be stored in the office safe until they can be realised or disposed of.

A receipt should be issued detailing the amount of currency handed over. The receipt should give the amount handed over in the foreign currency, not the amount when converted into pounds stirling.

(June 2010)

When traveller’s cheques are dealt with it is important that security checks are followed before the cheques are accepted. 

The traveller’s cheque should already be signed in the top left hand corner when presented for payment.  The official receiver (as acceptor) should ask the bankrupt to countersign the cheque in the lower left hand corner.  The signature and countersignature should be compared.  If the signatures do not match then the bankrupt may repeat the signature on the back of the cheque and the signature compared again with the initial signature.

If the official receiver remains unsatisfied that the signatures do not match, or the cheques are presented to the official receiver, both signed and countersigned then contact should be made with the issuer’s service department.

The bankrupt should be issued with a receipt for the traveller’s cheque stating the face value of the cheque and making it clear that payment was received in the form of a traveller’s cheque.

[Back to Introduction] [On to Part 2 - Earned/unearned income]