March 2008
PART 1
Under section 289 (1), the official receiver is under a statutory obligation to investigate the conduct and affairs of every bankrupt and make a report to the court if he/she thinks fit (this is rarely done). However the Enterprise Act 2002 introduced section 289(2) which disapplies section 289(1) where the official receiver decides that an investigation is unnecessary.
The official receiver must consider the following at an early stage in the proceedings:
a. Completion of the Case Assessment Record (CAR).
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, Part 4 and the http://intranet/DocumentLibrary/OROS/Word/CARguidancenotes.doc on the Official Receiver's Operations Section intranet site.
b. Meeting of creditors
whether to summon a meeting of creditors to appoint a trustee - see also Chapter 16 and Chapter 17. The exceptions to this are cases where the court appoints a practitioner when it makes the order, where there will not be such a meeting [note 1],
c. Statement of affairs
whether, in a creditor’s petition case, to release the bankrupt from the requirement to submit a statement of affairs or to extend the period for submission [note 2] - reference should also be made to Chapter 12; and
d. Report to creditors
the material obtained from the bankrupt and the organisations listed in Part 3 of this chapter will be the principal source of the information contained in the report to creditors.
Instructions for the completion of the CAR and the report to creditors are contained in the Case Assessment Record Guidance Notes (http://intranet/News/Archive/Docs/CARguidancenotes.doc) and further information relating to the CAR can be found in Chapter 15, and the report to creditors in Chapter 18.
4.4 Official receiver as receiver and manager
In the period between the making of the bankruptcy order and the vesting of the bankrupt’s estate in a trustee, the official receiver is the receiver [note 3] and, unless a special manager has been appointed, under section 370, manager of the bankrupt’s estate. His/her principal function is to protect the estate, including arranging insurance where appropriate and which may include continuing a business. The objective of protecting the insolvent estate and third party interests can be achieved by carrying out the initial enquiry process (see Part 2 of this Chapter and Chapter 15, Part 2) and, in the majority of cases obtaining the full co-operation of the bankrupt at an early stage. See also Chapter 8 and Chapter 62.
Section 287 gives the official receiver the same powers as if he/she were a receiver or manager appointed by the High Court (see Chapter 24). The official receiver is also permitted to take such steps as he/she thinks fit to protect any property that may be claimed for the estate by any subsequently appointed trustee (see Chapter 8, Chapter 17 and Chapter 49). Unless directed by the Secretary of State, he/she is not required to do anything that involves incurring expenses. In practice, this means that the official receiver is not obliged to incur a debit balance to deal with property which may ultimately not prove to be of value to the estate [note 4].
4.5 Disposal of assets before appointment of trustee
The official receiver, as receiver and manager, has the power to sell or dispose of perishable or other goods likely to diminish in value if they are not dealt with quickly (e.g. assets in store or upon which other payments are accruing) or are at risk. Small bank balances held in accounts which incur charges may be realised before the appointment of the trustee, as any charges incurred whilst the official receiver is receiver and manager may exceed the value of the balance. The standard bank letter gives the option to request that funds in the account be paid to the official receiver or, in the alternative, to be held to the order of the trustee [note 5].
Where any property needs to be dealt with quickly but does not fall within section 287(2)(b), the official receiver should seek the direction of the court before dealing with it [note 6].
The official receiver is required to maintain a case file in respect of each bankruptcy. The file is divided into 10 parts, and papers are filed within those 10 parts as follows:
Part 1. Preliminary examination papers
Part 2. Further investigation
Part 3. Court papers
Part 4. Statutory notices
Part 5. Correspondence
Part 6. Meetings, RTCs, notices and proofs
Part 7. Assets
Part 8. Closing/IP handover
Part 9. Early discharge and FTVA papers
Part 10. 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, paticularly paragraph 47.85 relating to the Gender Recognition Act 2004.
4.8 Practitioner appointed as trustee immediately
The court may appoint a practitioner as trustee directly in the following cases:
(i) where an insolvency practitioner has reported under section 274 (report on voluntary arrangement proposals) the court may appoint him/her trustee when a bankruptcy order is made [note 7], or
(ii) if the bankruptcy order follows a voluntary arrangement, the court may appoint the supervisor of the arrangement to be trustee [note 8].
An insolvency practitioner in office will probably be a useful source of information regarding the bankrupt’s affairs – particularly at initial enquiry stage (see Part 2 of this Chapter). The Trustee has a duty to provide the official receiver with information, records and assistance, as required [note 9] [note 10].
4.9 Continued duty to investigate etc.
Where a trustee other than the official receiver is appointed immediately, the official receiver remains under a statutory duty to investigate under section 289(1) (where he deems it appropriate - see paragraph 4.1), give notice of and gazette the order and provide information to creditors.
The official receiver may consider restricting the notices sent to third parties to those recipients whose reply would relate directly to the duty to investigate and not to send letters or notices which relate to asset recovery. In practice it may be difficult to separate these functions, for example when writing to the bank there may be no need to know the current balance on the account but details of overdraft facilities may be relevant to the investigation of the bankrupt's conduct and affairs. The official receiver must also obtain sufficient information to complete the CAR and issue a report to creditors. Where a trustee is appointed by the court in the circumstances mentioned above it is his/her duty, rather than that of the official receiver, to send forms of proof of debt. A proof of debt form must be sent to any creditor of the bankrupt by the official receiver or trustee where the creditor so requests [note 11].
4.10 Pre-bankruptcy queries from debtors
The official receiver should refer pre-bankruptcy queries to the Insolvency Enquiry Line Tel:0845 602 9848. The Insolvency Enquiry Line cannot, however, give advice or deal with case related queries unless the enquiry is of a general nature.
Requests for assistance in completing the registration process or completing petition forms on the online forms service (see paragraph 4.15) should be directed to the dedicated helpline (0113 200 6066).
The official receiver should explain to contacts in the local community (e.g. Citizens Advice Bureaux) that pre-bankruptcy queries are dealt with centrally.
When the bankrupt contacts the official receiver with a case related query subsequent to the interview, he/she should be directed to the relevant leaflet(s) in the first instance. The bankrupt should also be informed that if, after reading the leaflet(s), there are still matters which he/she does not understand, or cause concern, then he/she may telephone the official receiver's office for further guidance.
It is accepted that in certain cases the examiner will be pressed for an immediate answer and additional time will be spent dealing with these queries.
Non-case related callers to official receiver's offices should be referred to The Service's wide range of leaflets and FAQs on the internet, or sent copies. The official receiver should advise the caller to read through the literature and contact the Insolvency Enquiry Line (0845 602 9848) if they have any general queries.
4.12 Consolidation of petitions
Where two or more bankruptcy petitions are presented against the same debtor, the court may order the consolidation of the proceedings, on such terms as it thinks fit [note 12]. When the two cases are consolidated, the earlier date is taken as being the date of the bankruptcy order and the official receiver should not record a second date on LOIS as there is effectively then no second order. The second bankruptcy order and proceedings are merged into the first order and proceedings, care should be taken that the court provides for this in the terms of the order.
See paragraph 4.106 for action to be taken at the initial stage in respect of second or subsequent bankruptcies
[Back to Introduction] [On to Part 2 – Initial action, initial enquiries and initial contact on notification of a bankruptcy order]