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INITIAL ACTION, INITIAL ENQUIRIES AND INITIAL CONTACT ON NOTIFICATION OF A BANKRUPTCY ORDER

March  2008

PART 2                                                                                             

4.13 Notice to official receiver (amended April 2010)

The official receiver must ensure that the court gives him/her prompt notification of the making of a bankruptcy order. In both creditor’s petition and debtor’s petition cases at least two sealed copies of the bankruptcy order must be sent by the court to the official receiver as soon as possible. In a creditor’s petition bankruptcy, the official receiver must send one copy of the bankruptcy order to the bankrupt as soon as reasonably practicable. The same applies in a debtor’s petition bankruptcy unless the official receiver is satisfied that the bankrupt has already received a copy of the order [note 1]. A record of how service of the bankruptcy order was effected must be kept, normally by endorsement on a copy which can be placed on file.

 

4.13A – How to get bankruptcy orders corrected – “the slip rule” (amended April 2010)

The Civil Procedure Rules (CPR) provide that the court may at any time correct an accidental slip or omission in a judgment or order and a party may apply for correction without notice [note 1A]. The court also has a general power to rectify matters where there has been an error of civil procedure [note 1B]. In terms of a bankruptcy order, if a discrepancy is identified when comparing the details on the bankruptcy order to the details on the petition, and it is clear that the court have made an error, e.g. incorrect spelling of a name or address, then the official receiver can contact the court and request that the order is corrected and an amended version issued to him/her.

For further information on the “slip rule”, see chapter 19, paragraph 19.126

 

 

4.14 Debtor’s petition and statement of affairs

In cases where the bankruptcy petition was presented on or after 1 April 2004, debtors presenting their own petition are required to complete a comprehensive statement of affairs. The statement of affairs is filed in court and is available to the official receiver at an early stage of the case [note 2].

 

4.15 Debtor’s petition – on-line forms service (I-SOLV) - withdrawn as system no longer available

(January 2011) 

 

4.16 Debtor’s petition – court’s responsibility

It is the court clerk’s responsibility to ensure that the debtor has answered every question in the statement of affairs but not to check the contents of the statement of affairs. If the statement of affairs forms do not contain sufficient information, the official receiver could consider asking the bankrupt to complete another full statement of affairs. The forms are available at www.insolvency.gov.uk/forms/forms.htm

See Part 3 for further information on dealing with debtor's petition cases.

 

4.17 Gazetting and advertising (amended June 2009)

On the making of a bankruptcy order the official receiver is required to publish notice of the order in the "London Gazette", this is known as Gazetting. Gazetting is carried out centrally, following an automatic instruction instigated by the creation of a case (see Chapter 5, Part 2).

Where the petition was presented on or after 6 April 2009, the official receiver may (in addition to Gazetting) also advertise the order in such manner as he/she thinks fit, though he/she is not required to do so.  See Chapter 5, Part 3 for guidance on exercising the discretion to advertise [note 3]

Where the petition was presented prior to 6 April 2009, the public advertisement (usually, in a newspaper) is mandatory (see Chapter 5, paragraph 5.1)

A full description of the procedures relating to Gazetting and advertising is contained in Chapter 5 - Publication of insolvency information.

Where an application for a stay of advertisement or stay of proceedings is granted, reference should be made to Chapter 5, paragraph 5.22 and Chapter 6, Part 2.

 

 

4.18 Title of proceedings and any defects in that title

The petition must provide information about the debtor to ensure that he/she is correctly identified [note 4].

The matters to be stated are as follows :-

  1. his/her name, place of residence and occupation (if any),
  2. the name or names in which he/she carries on business, if other than his/her true name, and whether, in the case of any business of a specified nature, he/she carries it on alone or with others,
  3. the nature of the business, and the address or addresses at which he/she carries it on,
  4. any name or names, other than his/her true name, in which he/she has carried on business at or after the time when the debt was incurred, and whether he/she has done so alone or with others, and
  5. any address or addresses at which he/she has resided or carried on business at or after that time, and the nature of that business.

If the debtor has at any time used a name other than that referred to in (a) above, that fact shall be stated in the petition [note 5]. These particulars determine the full title of the proceedings [note 6].

 

4.18A Persons at risk of violence (amended April 2010)

This applies to cases where a bankruptcy petition was presented on or after 6 April 2010

Where the disclosure or continuing disclosure to other persons (whether to the public generally or to specific persons) of the bankrupt’s current address or whereabouts might lead to violence against the bankrupt or a family member who resides with him/her,  the court may, on the application of the bankrupt, the official receiver, the trustee or the Secretary of State, order that the bankrupt’s current address be withheld from specified documents and public sources of information. [note 6A] The bankrupt’s “current address” means the address of the bankrupt’s current place of residence and any address at which he/she carries on business. [note 6B].

Where such an application to court is made, the application must be accompanied by a witness statement referring to rule 6.235B [note 6C], and contain sufficient evidence to satisfy the court that the bankrupt or his/her family member would be at risk of violence or harm should his/her current address be disclosed.

If the application is successful, the court may order that:-

a) details of the bankrupt’s address be removed from any part of the court file which is open for public inspection and be kept on a separate file not open to inspection.

b) the bankrupt’s current address be removed from the bankruptcy order

c) the full title of the proceedings be amended  by the removal of the bankrupt’s current address from the description

d) details of the bankrupt’s current address be omitted from any notice to be gazetted or otherwise advertised.

e) the bankrupt’s current address is not included on the individual insolvency register or bankruptcy restrictions register.

f) details of the bankrupt’s current address kept on the individual insolvency register or bankruptcy restrictions register be removed.

Where the court makes an order on grounds (b) to (f), it may further order that any other details of the bankrupt such as a previous address where he/she has resided or carried on business, be included in the title of the proceedings, the description on the bankruptcy order, the contents of any gazette notice or advertisement or any details kept on or to be entered onto the individual insolvency register. [note 6D] The official receiver must ensure that immediate action is taken to comply with the terms of any court order made e.g. updating the ISCIS ‘Case Header’ tab to show ‘address withheld’ as this links to the Individual Insolvency Register (see paragraph 4.22).

If an order is made by the court to amend the full title of the proceedings, the official receiver must immediately send notice of it to the Chief Land Registrar who will amend the corresponding register. The official receiver may also gazette and/or advertise the order if he/she thinks fit. Any such notice should contain the standard contents, with the exception of the bankrupt’s current address. The amended title of the proceedings and the date of the bankruptcy order should also be included. The notice should not include the description under which the proceedings were previously published. [note 6E]   

The above provisions also apply where a person is subject to a bankruptcy restrictions order or bankruptcy restrictions undertaking. 

 

4.19 Amendment of title of proceedings (amended April 2009)

Where the information in the petition is incorrect or inadequate to enable creditors to identify the bankrupt, e.g. significant aliases [note 7] or trading addresses omitted, the official receiver should apply to the court to amend the title of the proceedings.  Where appropriate, the official receiver should consider Gazetting and advertising the amendment, for which reference should be made to Chapter 5 – Part 3.  Where the petition was presented before 6 April 2009, such Gazetting or advertisement would need an order of court. In undertaking this work, the official receiver is asked to take a balanced view of the effect a change in the description might have on the administration of the case. If the proposed change is only marginal, the cost of obtaining an order might outweigh its worth in the proceedings [note 8].

 

 

4.20 Matters to consider when amending a title of proceedings (August 2008)

Where the official receiver is considering making application to amend the title of proceedings, the following should be considered;

  1. Rule 6.7 and 6.38 provide that the bankrupt's name, place of residence and occupation is included in the title of proceedings. If the title of proceedings states the occupation, it is not necessary for the official receiver to amend the title except, for example, where the title names a serving member of the Armed Forces and the description refers to their rank, to a military establishment or ship, reference to which should be deleted.
  2. The official receiver may also consider requests to amend the title of proceedings for example where a police or prison officer's address is stated or in other instances where there are concerns about the bankrupt's safety.
  3. Where the bankrupt is (or has been) in prison, the prison address or other references which indicate that the bankrupt is or has been in prison should not be included in the title of proceedings.

Where the official receiver makes application as himself/herself (as opposed to as trustee) then no fee is payable to court when applying to amend the description. For information on gazetting and advertising the amended title of proceedings see Chapter 5.

 

4.21 Transfer

Where transfer to another court is imminent, consideration should be given to either dealing with the transfer application and combining any amendment application with this or, more usually, transferring the case as soon as possible to enable the recipient official receiver to make the application to amend in the relevant local court. Any re-gazetting and further notice to the Land Registry (see paragraph 4.60) will be dealt with by the official receiver attached to the court in which the amending order was made.  See Chapter 7 for further information regarding the transfer of proceedings.

 

4.22 Individual insolvency register (amended April 2010)

Following receipt by the official receiver of a copy of the bankruptcy order, certain information must be entered onto the individual insolvency register (IIR). The information on the register is drawn from LOIS, and must include –

a) the matters listed in rules 6.7 and 6.38 (identification of debtor) with respect to the debtor as stated in the bankruptcy petition;

b) the date of the making of the bankruptcy order;

c) the name of the court that made the order; and

d) the court reference number as stated on the order [note 9].

The following further information is also required to be entered on the register, as soon as reasonably practicable after receipt, by the official receiver [note 10]:

a) the name, gender, occupation (if any) and date of birth of the bankrupt;

b) the bankrupt’s last known address - if the official receiver becomes aware of a change of address then, unless there is a court order withholding the address from the public, LOIS should be updated and the new address will be transferred over to the IIR;

c) the date of any bankruptcy order or debt relief order (or if more than one the latest of them) made in the period of six years immediately prior to the date of the latest bankruptcy order made against the bankrupt (excluding for these purposes any order that was annulled or any debt relief order that was revoked);

d) any name by which the bankrupt is known, not being the name in which he/she was adjudged bankrupt;

e) the address of any business carried on by the bankrupt and the name in which that business was carried on if carried on in a name other than the name in which the bankrupt was adjudged bankrupt;

f) the name and address of any insolvency practitioner appointed to act as trustee in bankruptcy;

g) the address at which the official receiver may be contacted;

h) the automatic discharge date under section 279;and

i) where a bankruptcy order (based on a petition presented on or after 6 April 2010) is rescinded by the court, the fact that such an order has been made, the date the order was made and (if different), the date on which it has effect.

Again, the above information is extracted from LOIS.

 

4.23 Individual Insolvency Register – suspensions of discharge.

Where the official receiver receives a copy of an order suspending the bankrupt's discharge pursuant to rule 6.176(5) or rule 6.215(8) the official receiver must enter onto the individual insolvency register -

  1. the fact that such an order has been made, and
  2. the period for which the discharge has been suspended, or that the relevant period has ceased to run until the fulfilment of conditions specified in the order [note 11].

Where an order suspending the bankrupt's discharge under section 279(3) is discharged and the official receiver has received a copy of the certificate certifying the discharge of the order pursuant to rule 6.216(7), the official receiver must enter that fact onto the individual insolvency register, and also enter the new date of discharge of the bankrupt onto the register.

Where an order discharging an order under section 279(3) is subsequently rescinded by the court, the official receiver must amend the register accordingly [note 12].

The above information is extracted from LOIS.

 

4.24 Individual Insolvency Register – discharge.

Where a bankrupt is discharged from bankruptcy under section 279(1) or section 279(2), the official receiver must enter the fact and date of the discharge on the register [note 13]

The above information is extracted from LOIS.

All information concerning a bankrupt must be deleted from the register after three months has elapsed from the date of the bankrupt's discharge, or when the bankruptcy order is annulled or rescinded [note 14][note 14A] .

For more information on the removal of information from the individual insolvency register see Chapter 22, Part 1, and Chapter 6, Part 3 and Chapter 6A, Part 7.

 

4.25 Bankrupt's duty to the official receiver

The bankrupt has a duty to provide the official receiver with information about his/her estate and to attend on the official receiver when reasonably required. The bankrupt should be made aware of these provisions during any telephone conversations that take place shortly after the making of the order and section 291 is reproduced in form NTB2 which should be sent to the bankrupt or served on him/her [note 15]. 

 

4.26 Initial enquiries and initial contact – generally

The methology and purpose of enquiries made at the initial stages of a bankruptcy case will vary depending on whether the order was made on the petition of a creditor or the debtor him/her-self. The enquiries relating to creditors' petition cases might be categorised as "initial enquiries" and are coved in paragraphs 4.27 to 4.37, whereas the enquiries in respect of a case made on a debtor's petition might be categorised as "initial contact" and these are covered at paragraphs 4.38 to 4.44.

 

4.27 Initial enquiries – Creditors’ petitions

Initial enquiries may be defined as the initial contact with persons having knowledge of the affairs of a bankrupt, particularly – though not exclusively - the bankrupt him/herself.  Where possible, initial enquiries should be made within 24 hours of the office being notified of the order, and certainly within 48 hours. 

The purpose of any enquiries made by the official receiver shortly after the making of a bankruptcy order is to:

  • establish whether there is any continued trading activity and the nature of the assets;
  • to preserve the estate, which includes ensuring that assets are adequately insured, disposing of perishable or other goods likely to fall in value and protecting the estate from possible third party claims where the public could be at risk
  • to decide at as earlier a stage as possible whether investigation work is needed.
  • to locate, safeguard and collect books and records relating to the bankrupt’s affairs

Full details of the current procedure regarding initial enquiries can be found in the OROS Bulletin “Special Edition” which dealt with the subject.

The initial enquiries should be completed using the standard form [note 16].

 

4.28 Annulments and stays of proceedings and advertisement

Reference should be made to Chapter 6 Part 2 and Chapter 6A where the official receiver becomes aware that an application for an annulment or a stay has been, or is likely to be, made.

 

4.29 Insurance

If any assets are discovered during initial enquiries or at any other stage in the progress of the case, insurance cover should be arranged. If the asset is later discovered to be worthless, the cover should be cancelled promptly. For further information see Chapter 49 - Insurance.

 

4.30 Creditors’ petition cases – third party sources of information.

Prior to making, or attempting, contact with the bankrupt it may be appropriate to seek information from other sources such as Experian (see paragraph 4.47), the petitioning creditor or their solicitor (see paragraph 4.32) or the bankrupt’s accountant or solicitor (paragraphs 4.66 and 4.67).  In addition to helping in build up a picture of the affairs of the bankrupt, these sources may reveal contact details for the bankrupt.

 

4.31 Official receiver’s powers to request information

The official receiver has power to make application to court for the appearance of any person believed to be able to give information concerning the bankrupt or the bankrupt’s dealings, affairs or property [note 17].

 

4.32 Creditors’ petition cases - information from petitioner’s solicitors

The petitioner’s solicitors should be contacted by telephone immediately and asked whether there are any matters, other than those referred to in the petition, to which they wish to draw the official receiver’s attention.

The solicitors will often be able to provide details of [note 18]: -

  • the bankrupt’s solicitors or accountants,
  • telephone number(s) for the bankrupt and alternative contact addresses,
  • how the petition was served, by personal or substituted service,
  • whether the bankrupt was a trader and, if so, the trading address - goods may have been delivered to this address if the petitioner is a trade creditor,
  • whether the bankrupt is still trading,
  • possible assets,
  • bank accounts,
  • supporting creditors, and
  • any previous insolvency proceedings such as a failed voluntary arrangement or an earlier bankruptcy (see also paragraphs 4.103 to 4.106)

If the solicitors themselves can only provide limited information about a bankrupt, they may be able to provide a contact from their client who could provide further information.

For information on the ability of Crown departments to provide information please see paragraph 4.35 and Chapter 47, paragraphs 47.79(e), (f) and (g).

Guidance on contacting Crown departments is also available in the OROS section of the Intranet (http://intranet/OROS/OROS/ContactWithCrownDepa/ContactWithCrownHome.htm).

 

4.33 Creditor's petition case - contact with the bankrupt

The official receiver must attempt to make contact with the bankrupt within 24 hours (and at the latest within two working days of receiving written notification of the order). The bankrupt may have been present at the hearing or attended at the official receiver’s office after the hearing. If this was not the case, attempts should be made to contact the bankrupt by telephone using telephone numbers supplied by the petitioner or by checking in telephone directories or with directory enquiries (see paragraph 4.30 for suggestions as to third-party sources of information). Free telephone directory searches are available on the internet and may be accessed through the intranet via http://intranet/UsefulLinks/Default.htm. Contact with the bankrupt initially helps to ensure continued co-operation with the official receiver.

When contacting the bankrupt the official receiver should:

  • ascertain that enquiries are being made of the correct person;
  • establish whether the bankrupt is trading and if an inspection is warranted (see paragraphs 4.34 and 4.45);
  • obtain initial information, including details of any bank or building society accounts (see paragraph 4.56);
  • determine whether any immediate action is required to collect, protect or realise assets, to appoint an insolvency practitioner or to deal with any onerous property;
  • establish the location of any accounting records and to arrange delivery;
  • obtain details of any relevant parties to whom notice should be given to within the next 24 hours (see Part 3 of the Chapter);
  • establish whether the bankrupt is involved in any former and/or current insolvency proceedings, or any other civil litigation (see paragraph 4.50);
  • fix an appointment time for the bankrupt to be interviewed at the office or by telephone. In the case of a telephone interview the individual should be asked for details of his or her telephone number;
  • inform the bankrupt of the contact details of the person who is dealing with the case; and
  • let them know anything else that the official receiver deems appropriate to the case.

Additionally the bankrupt should be reminded of the importance of delivering up any accounting/financial records. The official receiver should also inform the bankrupt of the online form service and that the PIQB can be completed online and e-mailed to the official receiver. This is important as it means time saving in official receiver’s offices as information can be uploaded onto LOIS automatically.  The forms are available at www.insolvency.gov.uk/forms/forms.htm

The initial enquiries should be completed using the standard form [note 19].

 

4.34 Cessation of trade of an ongoing business

Should the official receiver’s enquiries establish that the bankrupt  is continuing to trade it is imperative that immediate action is taken to deal with the situation.

It is likely that the appropriate course of action will be for the official receiver to take action to close down any trading business(es) and notify employees of the effect of the bankruptcy order (see paragraph 4.52).

For the effect of a bankruptcy order on employees, see Chapter 76 – Employment Law and, for information on inspecting a trading business, see Chapter 8 - Inspections.

The official receiver will need to consider whether the business should be continued.  In reaching this decision reference should be made to Chapter 2 – Provisional liquidators and interim receivers and Chapter 62 – Carrying on a business.

 

4.35 Inability to make contact with bankrupt

In the event that contact with the bankrupt at the initial stage has not been possible, further attempts should be made, at different times of the day, to make contact.

Where the official receiver is unable to contact the bankrupt and no reply is received to correspondence an inspection can be carried out (see paragraph 4.45 and Chapter 8 - Inspections) and other enquiries made to establish the bankrupt’s current whereabouts.

Where the petitioning creditor is HM Revenue and Customs for unpaid tax and national insurance contributions contact should be made with the Enforcement Office, Worthing.

Where the petitioning creditor is HM Revenue and Customs for unpaid VAT, the (VAT) Insolvency Section will provide initial enquiry information (if known) on new cases if the official receiver is unable to obtain the information via other routes. A standard form is available for this purpose (Annex e to M65/02) http://intranet/News/Archive/Management/M65-02.htm. Requests for initial information should be sent by email.

If the bankrupt does not co-operate in the proceedings consideration should be given to holding a public examination [note 20] (see Chapter 14) and application to suspend the discharge period may be made by the official receiver or by an insolvency practitioner trustee [note 21]. See also Chapter 13 and Chapter 22.

Application may also be made to the court for the redirection of a bankrupt’s post if the official receiver considers it necessary (see also Chapter 13, paragraph 13.88) [note 22].

Please see paragraphs 4.47 and 4.48 for details on search facilities available to assist in the tracing of absent or non-surrender bankrupts.

 

4.36 Non-surrender cases – checking identity

Where enquiries, for example from the electoral roll or internet search sites, reveal a person of the same name at a different address the official receiver must make some checks to ensure that the individual is the bankrupt. No contact should be made unless there are strong grounds for suspecting that the individual is the bankrupt (perhaps because the name is out of the ordinary) and any subsequent approach to the individual should only be made by way of an enquiry and not by stating that the individual is bankrupt. Before making any approach, which should be regarded as being one to be made in exceptional circumstances only, appropriate contact should be made with the petitioning solicitors (see paragraphs 4.30 to 4.32).

 

4.37 Initial letter to bankrupt

Whether or not immediate contact is possible, a letter should be sent to the bankrupt within two working days of the official receiver receiving notification of the bankruptcy order requiring that he/she attend upon the official receiver for interview [note 23].  Whilst there is no deadline by which an appointment should be held, consideration should be given to the need to deal with the bankrupt’s affairs as expeditiously as possible and, also, the requirement to meet other deadlines such as completion of the CAR and issuing of the RTC. 

The letter setting the appointment and enclosing the preliminary information questionnaire should be sent to the bankrupt at the address given on the order unless the bankrupt has confirmed that he/she resides at a different address [note 24].

If it has not been possible to reach the bankrupt by other means, this letter may be the bankrupt’s first contact with the official receiver. 

The following should also be sent to the bankrupt:

  1. A sealed copy of the bankruptcy order, although the order may be served personally on the bankrupt if this is more convenient,
  2. Form NTB2 which gives the bankrupt notice of his/her duty to disclose after-acquired property and of bankruptcy offences. This form must be given to or sent to the bankrupt in all cases,
  3. A copy of the leaflet "What happens when you are interviewed by the Official Receiver?’ 
  4. A copy of the leaflet "What will happen to my home?", and
  5. A map showing the location of the official receiver's office, parking facilities and the nearest public transport, if the individual is required to attend for interview.

A record of how service of the bankruptcy order and NTB2 was effected must be kept, normally by endorsement on a copy which can be placed on file.

 

4.38 Debtor's petition case - initial contact

Following the making of a bankruptcy order in a debtor's petition case, the bankrupt should be contacted to obtain essential information pending the arrival of the statement of affairs. The initial contact should be recorded on form ICON. ICON should not be used as a checklist of what action should be taken in a case.

Subject to the exception below, the use of this form is mandatory and any locally devised additions to form ICON must be authorised by Official Receiver's Operations Section (OROS).  If initial contact has been made with the bankrupt at court or if he/she attends the office direct from court and the statement of affairs is available then it may not be necessary to complete form ICON.

ICON must be used to record essential information and this should be limited to establishing:

  • the bankrupt's contact details to enable an interview to be arranged if required and details of any special needs which would need to be considered;
  • whether the bankrupt is trading (see paragraph 4.34);
  • whether there are any assets in jeopardy which need to be dealt with;
  • whether there are any matters requiring immediate attention e.g. impending legal action; and
  • details of funds in a bank/building society that may be required for living expenses.

If the bankrupt is seen in person, the following forms must be given to him/her:

  • NTB2 - Notice setting out the duties and responsibilities of an undischarged bankrupt.
  • TNIDIS - Tax and national insurance disclosure
  • Ethnic monitoring form
  • Customer comment card
  • What will happen to my home?
  • What will happen to my bank account?
  • Insolvency Service charter
  • A copy of the bankruptcy order - if the bankrupt was not served with a copy at court.

It is not necessary to explain the bankruptcy restrictions to the bankrupt at this stage as they are included in the guidance notes to completing the debtor's statement of affairs. The bankrupt should be offered a copy of the “Guide to Bankruptcy” booklet

 

4.39 Interviewing at court

Interviewing at court should only be carried out by agreement with the court and only if it fits in with the current arrangements of the court for hearing debtor's petitions. The official receiver should not seek to persuade the court to change its procedures to suit the methods that he/she wishes to adopt.

 

4.40 Debtor's petition case - initial review on receipt of statement of affairs

Within two working days of receiving the statement of affairs, the examiner should carry out an initial review of the case. This should take around thirty minutes although it is acknowledged that in some cases more time will need to be allocated. The examiner should consider the 'causes of bankruptcy' (section 11) then establish whether the available information validates or contradicts what has been stated.

The official receiver should ensure that the statement of affairs is clearly marked with the date it is received in the office. For corporate governance purposes, this will ensure that it can easily be demonstrated that the review of the statement of affairs took place within two working days of its receipt.

Any matters requiring urgent attention that the ICON failed to draw out should be dealt with immediately.

The review should enable the examiner to:

  • identify the additional information required to make recommendations as to any further investigation;
  • draw conclusions as to the reason(s) for the insolvency;
  • draft instructions to case officers regarding the treatment of assets;
  • decide whether an IPA/IPO should be sought and,
  • determine whether the case is type 0, type 1 or type 2 - see below.

Within two working days of the statement of affairs being reviewed the following must be actioned:

  • the appropriate letter and enclosures to the bankrupt should be sent (see paragraph 4.41);
  • record trade classifications on LOIS (see paragraph 4.53), and,
  • notify any other parties e.g. landlords, banks (see Part 3 of this Chapter).

Following the initial review, the examiner should determine whether the case is a type 0, type 1 or type 2 case following the criteria in paragraphs 4.42 to 4.44 below. The Service has not targeted the numbers of each type of case it expects to deal with. The purpose behind splitting the categories is to allow examiners to decide which procedure should be followed in a particular case.

 

4.41 Debtor's petition case - Appointment letters

The appropriate appointment letter should be sent to the bankrupt within two working days of the initial review. The decision as to which letter to send depends on the type (see paragraphs 4.42 to 4.44) and circumstances of the case. The letters available are;

  • LIC - to be used when the bankrupt has been seen at court or at the office immediately after the making of the bankruptcy order.
  • LNI - to be used in type 0 cases where no interview is required.
  • LTI - to be used in type 1 cases (and some type 2 cases) where an interview is conducted by telephone.
  • NTB1 - standard face to face interview letter enclosing from PIQDP.

 

4.42 Debtor's petition - type 0 case - no interview

A case is defined as type '0' when;

  • no additional essential information is required;
  • no further investigation is required;
  • the case is suitable for early discharge;
  • the examiner believes that the necessary recommendations can be made and instructions given without contacting the bankrupt, and
  • the reason for the insolvency is fully explained in the statement of affairs.

The definition of type 0 cases should be strictly adhered to and should be restricted only to those cases in which, following the review of the statement of affairs by the examiner, there is no need for the examiner to initiate further contact.

In cases where an interview does not take place, the examiner must ensure that where there are assets to be realised or exempted, an appropriate letter is sent. This will ensure that the bankrupt is aware in a timely fashion of how the bankruptcy will affect certain assets. If insufficient information is available, a type 0 case may need to be redefined as a type 1 case. For example;

  • where a motor vehicle is to be treated as exempt property, the examiner is required to ascertain the reason for the exemption;
  • where further information is required to make an assessment for an Income Payments Order or Income Payments Agreement; or
  • where the bankrupt has supplied inadequate information regarding creditors resulting in the official receiver being unable to issue notices and reports to creditors.

 

4.43 Debtor's petition - type 1 case - short interview (up to 1 hour)

A case is defined as a type '1' case when, after reviewing the statement of affairs, the examiner requires more information. It is expected that the majority of interviews will be conducted over the telephone, although the bankrupt may request a face to face interview. For further guidance on interviews in type 1 cases please see Chapter 11.

Form TCIR must be used to focus on key issues and this can be completed as part of the initial review in order to identify any gaps in the key information provided. Form TCIR is intended for guidance only. It is indicative of the types of questions that should be asked but is not an exhaustive list. The examiner should ask questions which are relevant to the case. For example, it would generally be appropriate to devise additional questions in a case where the bankrupt has taken out a loan in the period of 12 months prior to the bankruptcy order, or where he/she has used new credit cards in the same period.

The following information should be recorded on form TCIR;

  • service of form NTB2 - the examiner should explain to the bankrupt which assets will be realised and should direct the bankrupt to the restrictions and other information provided in Insolvency Service leaflets. The examiner should inform the bankrupt to read the information at leisure and contact the office for any further explanation;
  • assets - any additional information;
  • income payments agreement assessment;
  • reason(s) for the insolvency;
  • documents to be provided by the bankrupt within the next seven days;
  • evaluation of the early discharge decision, and;
  • any other relevant information.

Form TCIR should be read in conjunction with the statement of affairs and initial contact information. It can be handed over to any insolvency practitioner trustee appointed if it will assist in their duties.

In a type 1 case the interview may be conducted immediately or an appointment can be made for a later date. At the start of the interview, the examiner should explain to the bankrupt that notes of the interview will be taken in the initial stages but if more detailed information is required then a narrative statement will be completed. The Service's policy that those who can contribute to their debts do so must be maintained thus, where the examiner has doubts over the accuracy of information provided in the statement of affairs regarding income and expenditure, further questions must be asked and the answers recorded on form TCIR.

It is not necessary to conduct a full interview where only one or two pieces of information are required. It is envisaged that in the majority of type 1 cases the interview will take no longer than 1 hour. Some interviews may simply involve a telephone call to the bankrupt to gather one or two additional items of information, for example, to confirm when debts were incurred.

If the interview is still ongoing after 1 hour the examiner should consider how the case is likely to progress e.g. are there are still some issues requiring further investigation or complex asset matters to be dealt with? In straight-forward cases the interview should be concluded as quickly as circumstances permit.

 

4.44 Debtor's petition - type 2 case

Cases not falling within type 0 or 1 are defined as type '2' cases and include all trading cases, second (or subsequent) bankruptcies and any other cases which the examiner believes require further investigation based on the information available during the initial review. The initial contact process is the same as in type 0 and type 1 cases.

The interview is usually conducted after the bankrupt has completed and returned (or brought to interview) the booklet PIQB.

Completion of form TCIR is optional in type 2 cases and the examiner may use another format to record the interview e.g. bullet point notes. A face to face interview is more likely to be required and the case will normally be allocated to a B3 examiner. The interview may take as long as is necessary (subject to the guidance in Chapter 11, paragraph 11.9). For further information on interviews in type 2 cases please refer to Chapter 11, paragraph 11.21.

 

4.45 Inspection

In most cases an inspection of the relevant business addresses should only be carried out if it appears that the bankrupt is trading or has only recently ceased to trade. The nature of the bankrupt’s business should also be considered before carrying out an inspection; for example, there should be no need to inspect the premises if the bankrupt traded from his/her own home and the only business assets are hand tools. Domestic inventories where household effects are listed are rarely carried out.

An inspection may also be carried out to confirm that a bankrupt is still resident at a particular address before commencing public examination proceedings (see paragraph 4.35).

Following an inspection, official receivers should arrange that insurances are effected as appropriate (see paragraph 4.29).

For further information relating to inspections, see Chapter 8.

 

4.46 Bankruptcy search

A search should be made to establish if the bankrupt has ever previously been bankrupt and, if so, whether or not he/she has been discharged from the earlier proceedings. Searches of the individual insolvency register to trace previous bankruptcies or individual voluntary arrangements may be carried out via the LOIS system.

Enquiries should also be made to establish whether the bankrupt is or has been subject to a Bankruptcy Restriction Order or Bankruptcy Restriction Undertaking.  Searches may be carried out on the Insolvency Service web-site (www.insolvency.gov.uk).

Disqualification checks to check if a bankrupt has been disqualified should only be carried out if there are circumstances which lead the examiner to suspect that a search may be worthwhile, for example, where the bankrupt discloses directorships of companies subject to an insolvency proceeding or he/she is employed by a company of which the directors are close family members. Such disqualification checks may be made with Companies House, Cardiff which is responsible for maintaining the Register of Disqualified Directors. The Register records details of all current disqualification orders and disqualification undertakings made in England and Wales, under the Company Directors Disqualification Act 1986 including any obtained by the Office of Fair Trading or other specified regulator. It also records details of those directors who have obtained permission of the court to continue to act as directors under section 17 of the Company Directors Disqualification Act 1986.

Disqualification orders made in Scotland and Northern Ireland are also registered at Companies House.

Checks are made using the Companies House computer database (www.direct.companieshouse.gov.uk) by selecting "director/secretary based enquiries" from the main menu and then selecting Disqualified Directors. Once the name is typed onto the screen, details of any disqualification order against the individual (including the section of the Company Directors Disqualification Act 1986 under which it was made, the length of the order or undertaking and any permission to act application) are displayed [note 25].

 

4.47 Experian CitizenView searches

The official receiver may, if he/she considers that the case merits it - for example a non-surrender case or a case where there is a lack of full co-operation – carry out a search using the Experian CitizenView facility.

Experian Citizen view searches can provide information relating to individuals such as address history, telephone numbers, voters roll information and details of judgements outstanding.  The cost of carrying out a search is currently £1.60 and is paid out of the administration fee, rather than being charged as a separate cost on the estate.

The search can be used to establish if the bankrupt has any further creditors or if he/she has a connection with any addresses not previously known.

Access to the search facility is available via a digital certificate which is given to ten users per official receiver’s office and five users per RTLU.  These are attached to an individual staff member’s login and can be accessed from any computer workstation. 

Further guidance on conducting Experian searches is available on the OROS section of the Intranet (http://intranet/OROS/CaseMngment/Experian/ExperianHome.htm).

 

4.48 Land registry searches

Searches may be carried out at the Land Registry to ascertain whether or not the bankrupt has an interest in any property or to establish a connection between the bankrupt and the address shown on the bankruptcy order.

See  Chapter 50 Part 5 for further gudance on conducting searches of the records held by the Land Registry.

 

4.49 Bankrupt in prison

Where a bankrupt is believed to be in prison but his/her location is unknown, the official receiver should contact;

HM Prison Service

Prisoner Location Service

PO Box 2152

Birmingham

B15 1SD

Fax:  0121 626 3474

 

Enquiries can be e-mailed to prisoner.location.service@hmps.gsi.gov.uk and should contain the full name of the person subject to the enquiry, any other names by which they may have been known, date of birth and reason for enquiry.

See Chapter 11, paragraph 11.13 for information and guidance on interviewing a bankrupt in prison.

 
4.50 Other legal proceedings after bankruptcy order

Subject to section 346 and 347 (attachment, execution and distress), no person having a provable claim against the bankrupt shall have any remedy against him/her or his/her property, or commence legal proceedings against him/her, without permission of the court.

 

Where, at the date of the bankruptcy order, the official receiver is aware that the bankrupt is a party to other legal proceedings, which have or may have (e.g. divorce proceedings) an effect on his/her property, or the bankruptcy proceedings generally, the official receiver should forthwith notify the court(s) and other parties to the proceedings of the making of the bankruptcy order. In such cases the court may stay such proceedings following notification of the bankruptcy order, until such times as a trustee has been appointed. It is important that the court is aware of the legal effects of the bankruptcy order, particularly with regard to assets which form part of the bankrupt’s estate and which the official receiver, as receiver and manager, is responsible for protecting, pending the appointment of a trustee [note 26].

 

4.51 Book debts

Full information relating to the collection of book debts is contained in Chapter 31.1. The following information is of particular relevance in the initial stages of a case:

Where a bankrupt has book debts as at the date of the bankruptcy order, the official receiver should instruct his agent "the contractor" (see paragraph 31.1.4) to realise the book debts on his behalf. The chance of recovering a book debt diminishes with time and consequently the contractor must be instructed as soon as possible after the existence of book debts are notified to the official receiver even if it is likely that an insolvency practitioner will be appointed as trustee after the first meeting of creditors.

If the book debts are subject to a charge, early contact should be made with the charge holder so it can be established who is to take initial action to protect and collect the trade debts.

Where there is an assignment of book debts or a factoring agreement, reference should be made to Chapter 31.1, paragraph 31.1.41.

 

4.52 Employees

Where a bankrupt has employees the official receiver must terminate employment with effect from the date of the order, whether or not the business continues to trade.  See Chapter 76 for further information on the effect of bankruptcy on employees.

Standard notice should be sent to every employee who may have a claim for wages, holiday pay, payment in lieu of notice etc. or in respect of redundancy, enclosing the necessary Employment Protection Act form [note 27].  The official receiver should issue employees with a standard letter [note 28] and the booklet “Redundancy and Insolvency, A Guide for Employees”, which contains the claim form.

The claim form is also available on-line http://www.insolvency.gov.uk/forms/rpforms.htm  

(See also Chapter 8 and Chapter 76).

 

4.53 Trade classifications

Details of the nature of the bankrupt’s business are submitted to Headquarters via LOIS on the 1st of the month following the making of the bankruptcy order.

 

[Back to Part 1 – Role of the official receiver] [On to Part 3 – Initial notices and letters]