PART 3

April 2010

PROCEDURE FOR DISCLAIMING

(Cases where the petition was presented on or after 6 April 2010)

NOTE

Transitional provisions for April 2010 Rule changes

For cases where the petition was presented on or after 6 April 2010, (unless in a company case there was a voluntary winding up resolution or certain administration proceedings prior to that date – see Annex F) the Rules described in this part will apply and the guidance and advice therein should be followed.

For cases where the petition was presented before 6 April 2010, the Rules prior to the introduction of the Insolvency (Amendment) Rules 2010 will continue to apply and the guidance and advice in Technical Manual chapter 34 part 3 (issued September 2008) may be followed. This is attached at Annex G.

34.52 Procedure for disclaiming – statutory notice of disclaimer

A disclaimer of onerous property (see paragraph 34.3) is effected by the service of a statutory form, referred to as a notice of disclaimer, [note 1] [note 2] [note 3], on interested parties (see paragraph 34.57) [note 4] [note 5], once authenticated and dated by the liquidator or trustee [note 6] [note 7]. The Insolvency (Amendment) Rules 2010 (IAR) made significant changes to the procedure for issuing disclaimers, most notably the removal of the requirement to have the notice sealed by the court prior to service on interested parties.

34.53 Description of property

The notice of disclaimer should contain a description of the property sufficiently detailed to ensure that there can be no doubt as to the property being disclaimed [note 8] [note 9].  For example, in relation to a lease a suitable wording would be:

“…..the [type of lease, e.g., counterpart] lease dated [date of lease] of the premises known as and situated at [address of property] comprising [e.g., a two-storey terraced house] which was let to the [company/bankrupt] from [date of commencement of lease] at an [annual/monthly] rent of [£].”

A suitable description for a right of action might be:

“……the claim numbered [claim number] in the [court] between [insolvent] and [other side] which was issued on [date].”

Where the property concerned consists of land or buildings the nature of the interest should be stated (e.g. leasehold or freehold) and if registered land the title number should be included.

34.54 Description of property where there is doubt

Where there is some uncertainty whether or not the insolvent has an interest in the property in question, or as to the nature of the interest, the official receiver may preface the description with the following:

“…..all the interest (if any) of [the company/bankrupt] in the……”

Similarly, where the official receiver is unable to obtain full information regarding the property (for example, where the director or bankrupt has failed to co-operate) he/she may describe the property in terms containing that information which is known.  It is generally better to issue such a disclaimer based on incomplete information than not issue one at all.

34.55 Power to disclaim

The power to disclaim is given to the liquidator or trustee [note 10] [note 11].  Where the official receiver is liquidator or trustee, this power is extended to any assistant official receiver appointed as a deputy official receiver to that official receiver [note 12] [note 13].  It is likely that an assistant official receiver in a standard official receiver’s office will have been appointed as a deputy [note 14] but, where there is doubt, reference should be made to the relevant certificate of appointment provided by the Secretary of State.

34.56 Disclaimer to be authenticated and dated by the official receiver

The notice of disclaimer must be authenticated and dated by the official receiver as liquidator or trustee [note 6] [note 7]. The Insolvency (Amendment) Rules 2010 introduced the concept of ‘authentication’ of documents to facilitate electronic delivery. Rule 12A.9 provides that a paper document is sufficiently authenticated if it is signed by the person sending or supplying the information. A document in an electronic format is sufficiently authenticated if the identity of the sender is confirmed in a way specified by the recipient. If the recipient has not specified how the sender’s identity should be confirmed, the communication is sufficiently authenticated if it is accompanied by a statement of the identity of the sender and the recipient has no reason to doubt the truth of that statement. In practice, official receivers are likely to continue preparing and signing disclaimer notices in paper form in most instances as it is unlikely that all interested parties in a case will have consented to electronic delivery.

In company winding up cases, a copy of the authenticated and dated notice must be sent to the Registrar of Companies as soon as reasonably practicable, and there is no longer a requirement for the notice of disclaimer to be filed with the court [note 15] [note 16]. In bankruptcy cases a copy of the authenticated and dated notice of disclaimer must be filed with the court as soon as reasonably practicable [note 17]. There are no specific provisions for partnership winding up cases but it has been agreed that official receivers will file a copy of the disclaimer notice with the court in such cases. Further details regarding the procedure and forms to be used when issuing a notice of disclaimer can be found in the Case Help Manual part Disclaimers.

In all cases, where the disclaimer is of registered land, a copy of the notice must be sent to the Chief Land Registrar, as soon as reasonably practicable [note 18] [note 19](for further details see paragraphs 34.63 to 34.64).

34.57 Service on interested parties

Within seven business days [note 20] [note 21] of the official receiver authenticating and dating the notice of disclaimer, he/she must serve copies [note 22] on all, or any, of the following:

• For leasehold property, every person who (to the official receiver’s knowledge) claims as underlessee or mortgagee [note 23] [note 24].
• Any person who claims an interest in the property [note 25] [note 26].
• Any person who is under a liability in respect of the property, not being a liability discharged by the disclaimer [note 27] [note 28].
• For unprofitable contracts, all such persons as to his/her knowledge, are parties to the contract, or having an interest in, the contract [note 29] [note 30].
• For dwelling houses (leased, leasehold or freehold), every person who (to the official receiver’s knowledge) is in occupation of, or claims a right to occupy, the house.  This may include the bankrupt, who is likely to be in occupation of the house [note 31].

The notice to interested parties need not be signed (by the official receiver, or any other officer) and can be issued by anybody acting for the official receiver.

Where the official receiver is issuing a disclaimer to an interested party based in a German-speaking, French-speaking or Spanish-speaking country he/she may issue the documents attached at Annex B, Annex C or Annex D respectively.

If, after the end of the seven business day period, the official receiver becomes aware of any other interested party, he/she must send or give them a copy of the notice of disclaimer as soon as reasonably practicable. This is not required if the official receiver is satisfied that the person has already been made aware of the disclaimer and its date or the court has ordered that compliance is not required. [note 32] [note 33]. 

34.58 Service of notice of a disclaimer of a firearm

Where the official receiver issues a disclaimer in respect of a firearm, he/she should serve notice of the disclaimer (see paragraph 34.52) on the firearms licensing section of the local police force.

See paragraphs 31.6.32 to 31.6.36 for further information on dealing with firearms.

34.59  Record of service of notice

The official receiver is no longer required to notify the court of all persons upon whom notice of the disclaimer has been served. Instead the official receiver must maintain a record on his/her own file of the following [note 34][note 35]:

1. All persons to whom the official receiver has sent or given copies of the notice of disclaimer, showing their names and addresses, and the nature of their respective interests in the disclaimed property;
2. The dates on which the copies of the notice were sent or given to those persons;
3. In company cases, the date on which a copy of the notice was sent to the registrar of companies;
4. In bankruptcy cases, the date on which a copy of the notice was filed with the court; and
5. In all applicable cases, the date on which notice of the disclaimer was sent to the Chief Land Registrar (see paragraph 34.63).

In practice, this record should be maintained by ensuring that copies of all of the following forms are placed on the office file:

• DISENC – Letter serving notice of the disclaimer on each individual interested party;
• F10.2 – Covering letter accompanying a copy of the notice issued to Companies House (company only);
• DISCRT1 – Letter requesting a copy of the notice of disclaimer be filed with the court (bankruptcy and partnership winding up); and
• AP1 – Form accompanying a copy of the notice of disclaimer to the Chief Land Registrar.

The covering letters should be completed in full with all necessary details for each recipient, so as to ensure that the requirements of the Rules are fully met. See the Case Help Manual part ‘Disclaimers – forms to be used’ for further information.

34.60 No delay to service on interested parties

The official receiver is required to give notice to interested parties [note 36] [note 37] within seven business days and, therefore, delayed notice cannot be used as a tool to delay the effectiveness of the disclaimer (see Part 4).  Where, between the sealing of the disclaimer and its return to the official receiver, another liquidator or trustee is appointed then the official receiver should bring the outstanding service to the notice of the practitioner appointed as a matter of urgency in order that they can effect timely service. 

34.61 Notice of disclaimer served on minors

Persons under the age of 18 in occupation of, or claiming a right to occupy, a dwelling house have a right to receive notice of the disclaimer.  Service of the notice on those persons may, though, be effected by service on the parent or guardian of that person [note 38].

34.62 Disclaimer of solely owned freehold property

Where it is necessary to disclaim an interest in a solely owned freehold property (see paragraph 34.27), notice of the disclaimer should additionally be served on the Crown Estate Commissioners at the following address:

16 New Burlington Place

London

W1S 2HX

Tel: 020 7851 5000

e-mail: enquiries@thecrownestate.co.uk

The reason for this is that on disclaimer of a freehold legal title vested solely in a bankrupt, the property passes at common law to the Crown and is a matter for the Crown Estate Commissioners (see paragraph 34.80 for further information on this). 

34.63 Registration of the disclaimer at the Land Registry – freehold property

Where there is a disclaimer of a solely owned freehold property the official receiver as liquidator or trustee must arrange for the disclaimer to be registered (this is known as “noting the lease”) with the Land Registry [note 18] [note 19].  Registration of the disclaimer is not necessary where the disclaimer was issued in respect of a jointly owned property as this has no effect on the legal title to the property – which would remain with the joint owner.  See paragraphs 34.79 and 34.80 for more information of the effect of a disclaimer on freehold property.

To effect registration, the official receiver should complete a form AP1* (www1.landregistry.gov.uk/.../AP1.pdf) and send this to the Land Registry, along with an office copy of the disclaimer and a copy of the winding-up order or bankruptcy order certified as a true copy by the official receiver. 

A covering letter seeking confirmation that the disclaimer will be noted should accompany the documents.  It is likely that the Registrar will refrain from registering the disclaimer until the period allowed for applying for a vesting order has expired (see paragraph 34.87).   

The procedure outlined above may also be followed in the very unlikely event that the official receiver, as liquidator, has property vested in him/her [note 39]. In such circumstances a copy of the court order vesting the property in the official receiver should also be sent to Land Registry.

* The official receiver need complete only sections 1-8 of the AP1 form.  In section 4 the nature of the application should be completed as “application to note disclaimer of [lease/freehold/leasehold]”.  The fee payable is on a sliding scale depending on the value of the property, as follows:

£0 - £100,000 = fee is £50

£100,001 - £200,000 = £70

£200,001 - £500,000 = £90

£500,001 - £1,000,000 = £130

£1,000,001 and over = £260

34.64 Registration of the disclaimer at the Land Registry – leased property

As outlined in paragraph 50.7 of Chapter 50 – Dealing with the Land Registry, certain leases are subject to compulsory registration at the land registry, whilst some others can be registered on a voluntary basis.  If the official receiver is disclaiming a solely-held registered lease then the disclaimer should be registered with the Land Registry in line with the guidance at paragraph 34.63.  This would not be necessary where the lease is held in the joint names of the insolvent and a third party (see paragraph 34.63 for an explanation).

34.65 Land Registry certificate – suggested form of wording

Occasionally, (usually in connection with an application to determine a lease) the Land Registry may require a certificate to be provided in connection with the registration of a disclaimer.

If required, a suggested form of wording for the certificate required to ensure that a disclaimer is registered at the Land Registry (see paragraph 34.63) would be:

“I, [official receiver’s full name and address] certify:-

On [date of bankruptcy order] a bankruptcy order was made against [bankrupt’s name] in the [name of court].  I am trustee of the bankrupt’s estate.

The bankrupt is the registered proprietor of the land in title number [title number] and at the date of the bankruptcy order the bankrupt had a legal title to the property.

The bankrupt’s legal title to the property forms part of the bankrupt’s estate and has been vested in me under section 306 of the Insolvency Act 1986.

On [date] I disclaimed my interest in the above title pursuant to sections 315 and [317(leasehold)/318(dwelling house)] of the Insolvency Act 1986.  Notice of the disclaimer was served pursuant to rule 6.179 of the Insolvency Rules 1986 on [date]. I am not aware of any application to the court for a vesting order pursuant to section 320 of the Insolvency Act 1986.

Signed: [official receiver]                             Date: [date]”

34.66 Additional notices

The official receiver is not limited to serving notice on those persons mentioned at paragraph 34.57.  Notice may be served on any person where the official receiver considers this to be appropriate.  An example of this may be where notice is served on the bankrupt in respect of a disclaimer of a right of action to avoid any continuation of the claim [note 40] [note 41] (see paragraph 34.26).

NOTE: Due to the updating and restructuring of the advice and guidance in this part, paragraph 34.67 no longer exists. However, as the previous guidance continues to be available at Annex G, changes have not been made to the paragraph numbering in parts 4 and 5.

[Back to Part 2 – Notice to elect / notice requiring disclaimer decision] [On to Part 4 - Effect of a disclaimer]