A person who is both authorised and has the necessary security to act as an insolvency practitioner (IP) may be appointed in place of the official receiver as trustee or liquidator of an insolvent estate. He/she must be authorised by the Secretary of State (SoS) or a recognised professional body.
An IP can be appointed as a result of a meeting of creditors (or contributories, in company matters) or by the Secretary of State on the application of the official receiver.
Where the creditors fail to appoint an IP at a meeting, the official receiver may consider asking the Secretary of State for the appointment of an IP who will be selected from the rota. For more information on Secretary of State appointments see Case Help Manual part: Appointment of Trustees and Liquidators by the Secretary of State.
An IP can also be appointed by the court on the making of an order (see paragraph 17).
The IP becomes responsible for the administration of a case on the date that the appointment becomes effective and the official receiver should seek to handover as soon as possible after the IP's appointment. In most cases it is normal practice to handover on the day of the meeting or the date of appointment.
The effective date of an IP's appointment as trustee or liquidator is important, as this is when he/she becomes personally responsible for the assets of the estate.
In cases where an IP has been appointed at a creditors' meeting, a consent to act must be given for each individual case and a copy placed on the office file. The date that this form is received by the official receiver becomes the IP's effective date of appointment as trustee/liquidator. In Secretary of State appointments, the IP does not need to provide a written form of consent in connection with a Secretary of State appointment, as his verbal consent would have been obtained before any application is made. Insolvency Practitioner Unit (IPU) will insert the effective date of the trustee's/liquidator's appointment on form IPSSC.
The official receiver owes both a common law and a statutory (Insolvency Rules 4.107 and 6.125) 'duty of care' to an IP when providing the trustee or liquidator with the information required to deal effectively with the estate. The official receiver should ensure that the IP is supplied with proper, complete and accurate information regarding the insolvent's estate.
Where appropriate, the examiner should provide notes for the IP encompassing any relevant information which the trustee/liquidator may need to know of. Such as, for example, concerning any urgent disclaimers required, or other possible recoveries, ongoing investigations or uncorroborated information and notes of telephone calls and meetings.
An estate may only be handed over to a trustee or liquidator where the IP is duly authorised and qualified to act, i.e. he/she is a licensed insolvency practitioner and holds a current insurance bond. Individual official receivers remain responsible for ensuring that IPs included on their rota are duly authorised and qualified to act, in order to accept an appointment as trustee or liquidator.
The official receiver can assume that an IP is duly authorised and qualified to act where his/her details appear on LOIS when using the "Select IP" function. Where the practitioner's details are not present on LOIS, Insolvency Practitioner Unit (IPU) Birmingham must be contacted to confirm that the IP is duly sanctioned and may be appointed as trustee/liquidator.
The official receiver should prepare a form IPHBP (which can be edited when the handover is not done by post). The form will also produce a pro-forma list of most of the documents to be handed over to the trustee/liquidator and can also be edited by the official receiver according to the circumstances of the case i.e. delete reference to IPO/A if not applicable.
In every case the following documents must be considered for handover and where required, details added to the pro-forma list
The IP (or his/her representative) must sign this list(IPHBP) by way of general receipt, together with a signed copy of the IP's undertaking (form IPUND, IP Appointment, undertakings - see paragraph 8). Signed copies should be retained on the office file.
In addition copies should be retained of all letters and forms handed over to the insolvency practitioner, including his/her certificate of appointment (IPSSC). By retaining copies on the office file the official receiver is able to maintain an accurate record of what has been handed over to the IP.
The insolvency practitioner is entitled to receive from the official receiver all of the insolvent’s (as distinct from any other party’s) books, papers and other records, and only in exceptional cases should the official receiver consider retaining any of these, e.g. because of a pending prosecution or disqualification. Any decision not to handover records should be taken by the examiner/AOR. In such matters, the IP would be invited to attend the official receiver's office to inspect the records when required. Any relevant documentation may be copied upon his/her request.
Where an insolvency practitioner is appointed the official receiver should make them aware of the existence and nature of any personal sensitive data held by the insolvent. An example of personal sensitive data would be lists of employees or those dealing with an insolvent which comprised names and addresses plus one or other of the following: dates of birth, national insurance numbers or credit card/bank account numbers.
Handling of personal sensitive data in this context would include collection, storage and transfer to IPs of insolvent’s accounting and other records (either in paper or electronic format) which might contain the type of information referred to above.
By signing form IPUND, the trustee/liquidator is formally acknowledging that the official receiver’s fees, costs and expenses must be paid first out of any realisations. This form must also be completed in cases where a credit balance is being handed over. Once signed, the form should be placed on the office file.
A trustee's or liquidator's record book (form IPROH) must be prepared in every case that is to be handed over and should include the 15 digit reference number (insolvent's estate account number) since the IP will need to quote this number in his/her transactions relating to the Insolvency Services Account.
The record book must include details of the assets comprised in the estate and their expected realisable values. It must include details of any potential civil claims such as preferences, transactions at an undervalue or wrongful trading. The official receiver should ensure that the attention of the insolvency practitioner is specifically drawn to the employment and payment of any agents, solicitors etc retained by the official receiver prior to handover, ensuring that he/she is aware that the liquidator or trustee is responsible for post appointment charges. The official receiver should inform by letter all agents who have been instructed that an insolvency practitioner has been appointed (form NACT).
Details of any insurance effected by the official receiver should be included in the record book and the insolvency practitioner should be given details of any premium payments made. Immediately after handing over the estate any insurance effected by the official receiver should be cancelled (subject to any instructions the practitioner may have given the insurer). For further information see Case Help Manual: Official Receiver's Insurance.
The examiner should provide a note for inclusion in the record book of any other matters of concern for the trustee/liquidator not already covered.
A copy of the record book must be kept on the office file.
The IP must also be provided with a cashbook showing the resultant balance being transferred to him/her as trustee/liquidator. This is a system generated event, but is only activated when the handover date has been input onto LOIS Screen 23. Estate Accounts Services is responsible for producing the cashbook and will forward it to the relevant official receiver, normally between 2-3 days after the handover. It is no longer necessary to have the cashbook signed by an assistant official receiver or any other member of staff. The estate cash book must then be forwarded to the IP and an acknowledgment obtained. A copy of the cash book must be retained for the office file.
Any invoice received after handover, e.g. insurance premium due, will be charged to the estate with the resultant debit balance being transferred to the IP.
Where a remittance is received after the case has been handed over to an IP it should be posted to the appropriate trustee/liquidator with a covering letter. A standard letter is available on Shared Drives for this purpose. A copy of the letter and the cheque should be filed in the non-banked correspondence file in case of a query at a later stage.
Copies of PIQs and statements may be supplied to insolvency practitioners on handover, provided that the matter has been duly considered and a note to that effect is made on the CAR B. In every case where an insolvency practitioner is appointed as liquidator or trustee, the official receiver must consider, based on the facts of the case, whether or not the information in the PIQ and any narrative statement taken is reasonably required by the liquidator or trustee and CARB duly noted. When considering this matter, the official receiver should note that an insolvency practitioner could, in any event, obtain the relevant information from the company officer or bankrupt through other means at his/her disposal.
It follows, therefore, that it would be an unusual case in which the PIQ and initial statements obtained at the early stages of a case contain information that is not reasonably required by the insolvency practitioner and in the majority of cases, copies of the PIQs and narrative statements will be supplied. The company officer or bankrupt is informed in the PIQ that the PIQ will be disclosed to any liquidator or trustee subsequently appointed by the following paragraph which appears below the interviewee's signature box:
"If an insolvency practitioner is appointed as liquidator/trustee of your estate in place of the official receiver, the liquidator/trustee will have separate powers to require you to provide information. However, a copy of this completed questionnaire will be given to any such practitioner and this should reduce considerably his or her need to contact you again for information."
Where applicable a similar paragraph to the one which appears in the PIQ should be added to any narrative statement taken to draw the interviewee’s attention to the fact that a copy of the statement will also be handed to any appointed trustee/liquidator. Where statements are obtained after a handover has taken place, the same consideration should be given to them and the interviewee notified that they will be handed over to an insolvency practitioner, either as part of the statement or separately. If considered appropriate copies should be supplied to the insolvency practitioner and a corresponding note placed on the file. If a statement contained information relating solely to further investigation matters, it might not contain information of use to an insolvency practitioner in carrying out his/her duties, but if the further investigation relates to the whereabouts or non disclosure of an asset, it would be likely to contain such information.
Official receivers should aim to hand over cases to IPs immediately, but in any event must effect the handover within 8 working days of their nomination, appointment or subsequent agreement to act.
With the majority of meetings, once the deadline for lodging proofs and proxies has passed, it is likely to be evident that a particular IP will be appointed. In such cases, the practitioner should be contacted so that arrangements can be made for the handover to take place immediately after the meeting. Even if all the papers cannot be assembled in time, the important documents can be handed over, the handover being at that date, with the remaining items following at a later date.
For details of the meeting forms also to be issued please see Case Help Manual part: Meetings - Day of the Meeting.
Any items, requiring the attention of the trustee/liquidator, received after the handover of the estate, should be forwarded to the IP without delay.
A handover can also be effected by post with the IP's approval using form IPHBP. Rather than waiting for the IP or his/her representative to attend the office and collect the items, the relevant documents together with his/her certificate of appointment can be posted directly to the IP. As with a face to face handover the practitioner must acknowledge receipt of those articles handed over by returning the handover list, trustee/liquidator's undertaking (IPUND), and any other specific receipt, duly signed. Any problems that you have concerning this should be referred to the examiner.
Where a trustee or liquidator is appointed, details of the involvement of the Service's book debt collection contractor, Moon Beever, will be include in the forms IPHBP and IPROH. Moon Beever should also be made aware of the IP’s appointment (NACT) urgently, since Moon Beever may wish to re-negotiate their employment with the IP. The official receiver will be invoiced for any recoveries up to the date of the IP’s appointment.
Official receiver's staff may receive applications or enquiries regarding a sanction. A brief explanation follows of the background to such applications.
The function of a liquidation or creditors’ committee is to ensure that the actions of the liquidator or trustee are not beyond his/her powers and that he/she carries out his/her functions in accordance with the provisions of the Insolvency Act. Where an IP is acting and no liquidation or creditors’ committee is appointed, IPU carries out the functions of that committee on behalf of The Secretary of State.
Where sanction is required by an IP an application should be submitted in writing or electronically directly to IPU. For example, the insolvency practitioner may wish to apply for authority to take or defend legal proceedings, to obtain an order for possession and sale of a property. Any applications or requests received by the official receiver should be passed to IPU.
Where there has been a direct appointment of an IP on the making of a bankruptcy/winding-up order by the court, a handover as such, is not necessary. When an IP is appointed on the making of the order, the appointment date and handover date should be entered on LOIS as the date of the order, as early as possible. The official receiver's debit balance will have to be discharged by the IP out of any realisations. The official receiver should send a letter to the IP informing him/her of this and also obtain a signed form of undertaking (IPUND). There is no need to complete a trustee/liquidator's record book but the estate cash book will still need to be sent to the IP and an acknowledgement of receipt obtained. The examiner will give you any relevant instructions regarding the case administration. If there are any queries please refer the matter to the examiner.
It is less likely that sight of the PIQ and any narrative statements taken will be of assistance to an IP appointed on the making of the order as he/she is likely to have prior knowledge of the case. Where sight would be of assistance a signed authority should be obtained from the bankrupt/director prior to disclosure being made.
For cases where an existing IP is replaced by another IP, IPU should receive notice directly. They will update Central Index which automatically updates LOIS. IPU also notify EAS who make the necessary changes on LOLA. There is no need for official receiver staff to take any action.
If official receiver staff have concerns about such a change in office holder and do not believe the information has been passed to IPU, they should contact IPU directly.
Where the official receiver is replaced as liquidator or trustee (not receiver and manager) as a result of the appointment of an IP following a meeting of creditors or a Secretary of State appointment and the bankruptcy or winding up petition was presented after 6 April 2010 notification must be given to court in order for the official receiver to obtain his/her release.
Word templates for these two forms (bankruptcy and company) have been created and can be found in the ‘forms to be used’ section.
Note: In pre 6 April 2010 petition cases the court receives such notification through the filing of the certificate of appointment of the IP but the filing of these certificates has been discontinued for later cases.
Where can I find out more?
Insolvency Act 1986:
Part XIII: Section 388 - 391
Insolvency Rules 1986 as amended:
Rule 4.107 - Handover of assets to liquidator
Rule 6.125 - Handover of estate to trustee
Case Help Manual:
IPCAM Certificate of appointment of trustee/liquidator at a meeting
IPSSC Certificate of appointment by Secretary of State
IPUND Trustee’s/liquidator’s undertaking on handover of estate
FAC OR’s notice to court filing copy of certificate of appointment of Trustee/Liquidator (pre 6.4.10 petition cases only)
IPROH OR’s report to trustee/liquidator on handover of estate (record book)
IPIB/D OR's notice to bankrupt/director of appointment of Insolvency Practitioner as Trustee/Liquidator
IPHBP - OR's letter to IP/Court forwarding certificate
NACT - Notifying agent of case transfer
Notice to Court under section 174 that Official Receiver has ceased to be Liquidator- for Word template Click HERE
Notice to Court under section 299 that Official Receiver has ceased to be Trustee- for Word template Click HERE
Click HERE to view the Flowchart for Handover to IP.
LOIS screen references are given in brackets e.g. (D073).
Before the handover.
2 Prepare all the items for handover (see paragraph 6) and ensure that copies are made where necessary. Check any unusual items with the examiner.
3 Ensure that you have sufficient copies of the trustee/liquidator's certificate of appointment (photocopy where necessary). Certificates would have been signed by the chairman where the IP was nominated at a meeting (IPCAM) or by IPU in a Secretary of State appointment (IPSSC).
4 Prepare 2 copies of the trustee or liquidator's record book by completing all the relevant information regarding the case on LOIS, form IPROH (D073). Check LOIS (CA08) for any additional matters that the examiner has asked should be included in the IPROH. Obtain a signature, according to local office practice.
10 If the official receiver has been replaced as liquidator or trustee as a result of the appointment and the bankruptcy or winding up petition was presented after 6 April 2010 send notification to the court using the Word template forms in the ‘forms to be used’ section.
Day of handover
N. B. It is not possible to print some of the LOIS forms in advance of the appointment date and these can only be produced on or after the date of appointment has been entered onto Screen 23.
16 Where the handover is to be done by post the IP will duly sign and return the handover list, IPUND and any other specific receipt requested. These items should be placed securely on the office file.
If you are unsure whether any item should be sent to the IP, check with the examiner before doing so.
17 The estate cashbook will be prepared by Estate Accounts Services and dispatched to the relevant OR's office. Upon receipt, the cashier will enclose an up to date ledger sheet from LOLA and forward to the IP appointed as trustee/liquidator. A copy must be placed on the file.