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Reports to Creditors
January 2006
Introduction
1. Why does the official receiver issue reports to creditors?
The official receiver is required, by the legislation, at least once after the making of a winding-up or bankruptcy order to report to creditors on the proceedings and on the state of the insolvent’s affairs. In the case of a winding up, the report will also be sent to the contributories. By providing informative and relevant information to creditors, the official receiver encourages them to provide useful feedback that may aid decision-making and further investigation efforts. An information sheet is attached to the report which provides details of the type of information that might be useful to the official receiver for investigation purposes. The report will also provide creditors and contributories with a contact name and address and advise them at an early stage that the official receiver is dealing with the insolvency proceedings.
In certain circumstances (usually non-surrender cases) the official receiver sends out a first report to creditors which does not contain much information about the reason for the insolvency other than details of the petition and bankruptcy/winding-up order and the extent of any other known debts. In these circumstances the official receiver will also comment on what further action is now to be taken. When material new information is received, possibly after the publication of the gazette or an advertisement or subsequent surrender of the bankrupt or director, the official receiver should send a further report to creditors. Additionally, where an investigation has resulted in a successful conclusion of prosecution proceedings, or an application for a disqualification order or bankruptcy restrictions order, the official receiver should generally further report this success to the creditors. For exceptions, however, please see Technical Manual Chapter 18, part 2, paragraph 18.20.
If the official receiver considers that the cost of reporting, having regard to the number of creditors (and/or contributories), their interest in the proceedings and the amount of assets available, is likely to be excessive, he/she should consider applying to the court either to relieve him/her of his/her duty to report or to authorise him/her to report in a different way, for example by advertising where a copy of the report can be obtained. The official receiver should only consider making such an application where he/she is dealing with a case which has an exceptionally large number of creditors/contributories. The application should also cover the seeking of relief from sending out individual notice of a meeting/no meeting.
2. Can the official receiver send the report to creditors by electronic means?
(Amended April 2010)
With effect from 6 April 2010 the official receiver is permitted to send his or her report to creditors by electronic means provided that the creditor or contributory has consented and has provided an electronic address for delivery. Where the official receiver issues a report to creditors by electronic means, the document must contain or be accompanied by a statement informing the recipient that they may request a hard copy and providing a telephone number, email address and postal address for making such a request. Where a hard copy of the report is requested, it must be sent within 5 business days of receipt of the request.
The official receiver may also satisfy his or her requirement to report to creditors and contributories by the report being available for viewing or downloading on a website. The official receiver is required to notify creditors and contributories of the address of the website together with any password required to access or download the document. The notice must also contain a statement informing the recipient of their entitlement to request a hard copy of the report and specifying a telephone number, e-mail address and postal address to make such a request. Where a hard copy is requested this must be issued within 5 business days of the receipt of the request.
Where a notice to creditors and contributories is issued informing them of a website address where they can view the report, the report to creditors must be available on the website for a period of not less than 3 months after the date on which the notice was sent.
3. When should the report to creditors be issued?
The report to creditors/contributories should be issued as soon as possible since early dispatch will reduce the number of routine enquiries received, though a balance should be struck between this and providing adequate information to creditors. For example, if you knew that the bankrupt/director was to attend the office for an interview when the case was 5 weeks old, you would not issue a non-surrender report to creditors (CAR A) with little information for creditors prior to this time.
The report must be completed by the examiner, using the appropriate CAR A form and issued with, either the notice convening a first meeting (form NFM) or a notice stating that no meeting will be held (form NNM). There is no statutory time limit within which the official receiver is required to issue a report to creditors, but The Insolvency Service aims to issue the majority of reports to creditors within 8 weeks of the making of the order.
4. What if the proceedings are annulled, stayed or rescinded?
If the proceedings have been annulled, stayed or rescinded, the official receiver no longer has a duty to issue a report to the creditors. In a bankruptcy, however, the official receiver must contact everyone already notified of the making of the bankruptcy order to inform them that it has been annulled (form NABO). Whilst the official receiver is not compelled by the Rules to notify creditors in a winding up of a stay of proceedings or the rescission of the winding-up order, an early letter informing them of the position is likely to reduce the number of queries received.
5. Who will receive a copy of the official receiver’s report?
(Amended April 2010)
The report is sent to the creditors, the contributories of a company and the liquidator or trustee (if other than the official receiver). "Creditors" means those who are known to the official receiver as such, i.e. are on the list of creditors, are listed in the preliminary information questionnaire (PIQ) or, where a statement of affairs has been submitted, are disclosed on that document. Where someone states that they are a creditor or contributory, and they are not recorded in the proceedings as such, they should be asked to provide details in writing. This can either be on paper or in electronic form and must be provided prior to a copy of the report being sent to them. Once such details have been received, they should be treated as a creditor. The official receiver’s report should only be given or copied to creditors or contributories (or, alternatively, their representatives, provided they have written authority from the creditor or contributory they represent, or the official receiver is otherwise satisfied that they have been retained by the creditor or contributory concerned). It should be noted that the Rules do not provide for other office-holders, for example an administrative receiver, to be provided with a copy of the report. Reports should never be given or copied to journalists or press agencies.
With effect from 6 April 2010 the official receiver is no longer required to file a copy of the report to creditors / contributories at court. Where a notice of no meeting is issued a copy of this must still be filed at court. Please note that the court copy of the form NNM is automatically generated when form NNM is specified.
Prior to 6 April 2010 a company officer or a bankrupt could obtain a copy of the report to creditors through his/her right to inspect the court file and to take copies of documents on it. In future, the official receiver may provide a company officer or a bankrupt with a copy of the report to creditors upon request, but he/she must be satisfied as to the identity of the individual making the request. In these circumstances it would be sufficient to ensure that the requested report is sent to the address of the company officer or bankrupt known to the official receiver.
Any requests under the Freedom of Information Act 2000 for a report to creditors or a list of creditors from companies that are not creditors of any specific insolvent should be referred to the examiner. For more information see Technical Manual: Chapter 81 - Freedom of Information and Data Protection and Case Help Manual part: Freedom of Information and Data Protection Act.
6. What information is included in the report?
The report to creditors must include full details of the assets and liabilities in the insolvency and an indication of whether there is any realistic prospect of a payment to creditors. It must be made known why certain property disclosed in the proceedings cannot or will not be realised for the benefit of the creditors (this includes exempt property). Reference should also be made as to whether an income payments agreement/income payments order (IPA/IPO) is being obtained and, if so, for how much and for what period, but please see paragraph 7 for the procedure in debtor’s petition cases.
The bankrupt’s or director’s reasons for the insolvency should also be disclosed so that creditors can make an assessment as to whether these match their knowledge of events and can inform the official receiver of matters of which he/she may not be aware and that would be relevant as to how he/she proceeds. If the official receiver disagrees with the reasons given for the insolvency there should be a statement to that effect giving the official receiver’s views as to the reasons for the insolvency.
Although the report to creditors makes no mention of discharge in bankruptcy cases, it should also contain sufficient information to enable creditors to form a view as to whether they wish to make representations as to a bankrupt’s unsuitability for an early discharge from the proceedings. This will be of use later when creditors receive the official receiver’s letter regarding the early discharge process.
For further information see Case Help Manual part: Discharge From Bankruptcy
The Case Assessment Record (CAR) form incorporates a report to creditors (CAR A). The CAR A form provides details of the information which is to be included and further guidance can be found in Part 4 of the Case Assessment Record (Revised Guidance Notes) which can be found on the OROS intranet site. (Also see: Technical Notices T9/04 and T21/04).
However, in order to streamline the process in debtor’s petition cases only, there are two further shortened CAR A forms available. These forms are to be used in specific circumstances as follows:
These revised CARA forms will only be suitable for use in appropriate type 0 and type 1 cases. In all meeting cases, type 0 and type 1 cases that do not fit the criteria above and type 2 cases, the standard CAR A form should be used.
For further information see Case Help Manual part: Initial Contact and Technical Notice - T36/05.
The CAR form will continue to be completed electronically by the examiner and submitted, where appropriate, see Management Notice - M1-05, for approval by the AOR. The CAR A form should be saved by the examiner in an individual electronic case folder on the local shared drive and stored according to local office practice.
Once approved, the appropriate CAR A form is passed to the case clerk for issue with form NNM/NFM (notice of no meeting / first meeting) to all known creditors (LOIS screen 31). Where a meeting is to be held a proof of debt form and proxy form should also be issued (POD, PROXY). The meeting decision and date of issue of the report to creditors should be recorded on LOIS Screen 21.
For further information see Case Help Manual parts:Meetings
(Amended May 2010)
Where there is a winding-up order only against a partnership without insolvency orders against any of the members, the report should only contain details of the assets and liabilities of the partnership/a summary of the partnership statements of affairs, if appropriate, and the official receiver’s report on the partnership, which is treated as an unregistered company. Details of the partners’ separate affairs should not be given in the report.
Where there is a winding-up order against a partnership and an insolvency order against one or more of the partners, separate reports must be prepared for each estate (i.e. the partnership and each member) for issue to the respective creditors. This ensures that creditors only receive information to which they are entitled.
Specific CAR A forms for use in partnerships can be found under the “Forms to be used” section below and can be accessed by clicking on the appropriate form. It is suggested that in an Article 14 case, where bankruptcy proceedings are consolidated to enable a partnership estate to be dealt with, the CAR A Article 11 form can be used, with references to Article 11 being replaced by Article 14.
For further information see Case Help Manual parts: Partnerships and Meetings.
9. What is qualified privilege?
Due to the nature and source of the information contained in the report to creditors, and because the official receiver has a statutory duty to issue the report, he/she retains a benefit known as qualified privilege which protects him/her from being sued for defamation.
It means that as long as the information contained within the report is believed by the official receiver to be true and has not been included for any malicious reasons or with a desire to injure, the official receiver cannot be sued for defamation. The best way is to adopt a fair and reasonable approach to every case. It is also important that third parties such as banks, accountants, solicitors and creditors are not named in the report, as this could result in legal action being taken against the official receiver.
Where can I find out more?
Insolvency Rules 1986 as amended by Insolvency (Amendment) Rules 2010:
Rules 4.43 - 4.49 Information to creditors and contributories
Rule 4.59 Notice of meetings by advertisement only
Rule 4.107(8) Hand-over of assets to liquidator
Rule 6.212(1) Notice to creditors
Rules 6.73 to 6.78 Information to Creditors
Rule 6.85 Notice of meetings by advertisement only
Rule 6.125(8) Hand-over of estate to trustee
Rule 12A.10 Electronic delivery in insolvency proceedings - general
Rule 12A.11 Electronic delivery by office-holders
Rule 12A.12 Use of websites by the office-holder
Insolvent Partnerships Order 1994 Articles 7-11
Technical Manual
Chapter 6 - Appeals, Stays and Rescissions
Chapter 18 - Reports to Creditors and Contributories
Chapter 81 – Freedom of Information and Environmental Information
Case Help Manual
Freedom of Information and Environmental Information Regulations
Insolvency Casework Standard
Notices
M1-05 – Change To Screen 85 – Introduction Of Examiner “Self Sign-Off”
T9-04 – Introduction of The Case Assessment Record (CAR) Incorporating A Revised Report To Creditors
T21-04 - Revision Of The Case Assessment Record
T36-05 – Revised Procedures for dealing with Debtor’s petition cases
CAR A, CARAS, CARASIPA – Case Assessment Record – report to creditors
NABO - Notice of annulment of bankruptcy order
NFM – Notice of first meeting
NNM – Notice of no meeting
Partnership: CAR A (c1) (partnership) Article 7,8,9 or 10
CAR A (c1) (corporate member) Article 8 or 10
CAR A (b1) (member) Article 8 or 10
PROXY - Proxy
POD - Proof of debt
Click HERE to view the flowchart for Reports to Creditors
Procedure
LOIS screen references are given in brackets e.g. (DO73)
1 Receive papers from examiner, which will include details of CAR A, form report to creditors. In debtor’s petition type 0 or type 1 cases this may be a CARAS or CARASIPA form. (Standard CAR A forms may still be used in these cases where appropriate to do so).
2 Ensure all known creditors including those listed in the PIQ and/or statement of affairs are listed on LOIS (CA31).
3 In bankruptcy only, if the proceedings have been annulled, stayed or rescinded form NABO (notice of annulment of bankruptcy order) must be issued to everyone already notified of the bankruptcy order. In company cases check with examiner as to what notification, if any, should be issued.
4 In bankruptcy only, check whether instructions have been given to amend the description and action accordingly. See Case Help Manual part: Amend Description
N.B. The meetings decision must be entered onto LOIS (CA21) before the NNM (notice of no meeting) or NFM (Notice of first meeting) will be generated.
5 If no meeting, arrange for the issue of the report together with form NNM (notice of no meeting) to all known creditors (CA31), according to local office practice. A notice to court will be automatically generated.
6 Input date of issue of report and no meeting notice on LOIS (CA21).
7 If meeting required fix the meeting date and enter details on LOIS (CA21). A minimum of 14 days notice must be given (for cases with petitions before 6.4.10 the minimum period is 21 days). In practice a longer period is given to allow for dispatch and posting. In a few cases this date may fall outside the Service's aim of notices issued within 8 weeks of the date of the insolvency order. In these circumstances refer matter to examiner to see whether an extension of time needs to be applied for. In all other cases arrange for issue of the report together with form NFM (notice of first meeting), POD (proof of debt) and PROXY to all known creditors (CA31), according to local office practice .
8 Input date of issue of report and meeting notice on LOIS (CA21).
9 Issue the Gazette notice of meeting in accordance with CHM Part: Publication of Insolvency Information.
For further information see Case Help Manual part: Meetings- all parts