Part 4 Cash at bank
October 2012
31.5.63 Cash at bank – initial contact
The official receiver should contact the company’s or bankrupt's bank within five days of the winding-up or bankruptcy order where possible. The official receiver should where possible obtain the account number and sort code to enable the bank to identify the account from the petitioning creditor or from the director or bankrupt during the initial telephone contact. In debtor’s petition cases details of the bankrupt's bank account should be provided in the statement of affairs.
31.5.64 Cash at bank – preliminary examination
Directors and bankrupts are asked to provide details of any bank or building society accounts, and warned not to use them, in the appropriate Preliminary Information Questionnaire. If the official receiver becomes aware of any, or any additional, bank accounts during the preliminary examination he/she should contact the bank without delay to prevent any unauthorised use of the account. This would usually be by telephone immediately after the preliminary examination.
31.5.65 Bank accounts discovered after the preliminary examination
Where the official receiver discovers a bank account after the preliminary examination has been completed he/she should inform the bank of the winding-up or bankruptcy order without delay, where applicable, by telephone, in an attempt to prevent any unauthorised use of the account.
The Insolvency Service intranet site provides contact details and procedures for giving banks notice of a winding-up or bankruptcy order. The information is available on the Official Receiver’s Business Support (ORBS) intranet page and is available here.
31.5.67 Obtaining copy bank statements
The official receiver may decide to obtain copy bank or building society account statements to assist with asset recovery or investigation work. The Service has an agreement with certain banks/building societies, that requests for copy statements will be sent centrally by Official Receivers’ Business Support (ORBS) on a fortnightly basis. The official receiver should consult guidance at Annex A prior to requesting copy statements to see if the bank or building society concerned is participating in this agreement. If they are, the guidance should be followed together with the locally agreed procedure for completing the ORBS spreadsheet. Requests for statements from other financial institutions should be made directly to them with a request that they are provided to the official receiver free of charge.
31.5.68 Cash at bank – companies in liquidation
Where, a bank holds a credit balance (after taking into account any right of set-off) the official receiver should send the ISCIS bank notice, BANK 1, asking for the balance to be paid to the official receiver. In deciding the resources required to realise the balance the official receiver should follow the guidance in paragraph 31.5.76.
31.5.69 Cash at bank – bankruptcy
(amended July 2013)
Where a bank account has a credit balance the official receiver should send notice to the bank regardless of the source of the funds that make up the credit balance. For example the credit balance may consist of earned income, a lottery win, state benefits, etc or a mixture of all these sources. The official receiver may realise the whole, part or none of the credit balance (see paragraphs 31.5.70 and 31.5.71).
31.5.70 Cash at bank – claiming the full credit balance
Where the official receiver is satisfied the balance vests in the trustee (see paragraph 31.5.69), and that no money is required for the bankrupt’s immediate day to day expenses (see paragraph 31.5.71), he/she should send a BANK 1 notice to the bank closing the account and asking for the credit balance to be remitted to him/her. In closing the account the official receiver should follow the guidance in paragraph 31.5.76.
31.5.71 Cash at bank –money required for the bankrupt’s immediate household expenditure
The bankrupt should be allowed to keep sufficient income to meet his/her immediate day to day expenses (see paragraph 31.5.19 for further details). In calculating this amount the official receiver should take into account any monies the bankrupt earns from his/her salary, wages or self-employment that are regularly paid into the bank account, either by the bankrupt or by bank transfer. The official receiver should release sufficient monies to the bankrupt to enable him/her to provide for himself/herself and any dependants whilst waiting for his/her next payment of income. After releasing monies to the bankrupt, there may still be a credit balance in the bank account.
31.5.72 Estimate of monies required for the bankrupt’s immediate household expenditure
The bankrupt should be asked, at the earliest opportunity, to provide an estimate of the immediate household expenditure for himself/herself and dependants together with details of household income from all sources. This estimate can be obtained by telephone, or by e-mail. In debtor’s petition cases the official receiver should check this information against the information provided in the statement of affairs. Where the bankrupt is self-employed or paid irregularly then he/she should be asked to provide an estimate of his income based on anticipated earnings for the next month.
31.5.73 Dealing with credit balances – account into which bankrupt’s income is paid
Where, a bank holds a credit balance and the official receiver accepts the bankrupt’s estimate of the amount required to meet his/her reasonable domestic needs (see paragraph 31.5.71) a BANK 2 notice should be issued to the bank. The BANK 2 notice should state the amount to be released to the bankrupt and the amount, if any, to be remitted to the official receiver (see paragraph 31.5.71).
31.5.74 Cash at bank – account remaining open
Where the official receiver does not intend to close the account he/she should issue a BANK 2 notice to the bank. The official receiver should not take possession of the bankrupt’s bank card as the decision to close the account will be taken by the bank. The official receiver, where he/she is claiming part of the credit balance, should write to the bank advising them of the amount to be released to the bankrupt and the amount to be remitted to the official receiver. Where appropriate the official receiver initially may telephone the bank following this up with an e-mail or fax confirming the telephone conversation. A file note should be made of the agreement made with the bankrupt as to the amount to be withdrawn.
31.5.75 Cash at bank - other accounts
The bankrupt may have, in addition to the account into which his/her income is paid, a number of other bank accounts. The credit balance on any other account, for example savings and deposit accounts, should be realised unless the funds came from a source which does not comprise part of the bankrupt’s estate as per paragraph 31.5.70.
31.5.76 Cash at bank - the cost of realising a credit balance
The cost of the effort made to recover a credit balance should not be more than the amount realised. If the credit balance (or the sum of balances with one bank) is £50 or less, the appropriate ISCIS bank notice (BANK 1 or BANK 2) should be sent asking for the balance to be paid to the official receiver. The notice should be followed up by a telephone call and generally no more than one further follow-up letter. Where the credit balance exceeds £50 the official receiver should exercise his/her discretion as to the resources required to collect the balance.
31.5.77 Cash in a joint account – who owns the funds
Where the bankrupt has a joint bank account with a credit balance the official receiver should take the necessary steps to determine who owns the monies. The official receiver should obtain, where possible, documentary evidence to confirm the source of these funds (see paragraph 31.5.79 for more details).
31.5.78 Cash in a joint account - money required for the bankrupt’s immediate household expenditure
The bankrupt should be allowed to retain sufficient funds to meet his/her day to day living expenses (see paragraph 31.5.71). Where the joint account holder contributes to the household income and the payment of household expenses allowance should be made when calculating the amount to be released to the bankrupt. Further details on calculating the amount to be released, if any are contained in paragraphs 31.5.72 and 31.5.73.
31.5.79 Cash at bank – joint account
Where a credit balance remains in the joint account after taking into account monies required for the bankrupt’s immediate day to day expenditure (paragraph 31.5.78) and/or state benefits the official receiver should try and establish whether it can be traced to the joint account holders. If necessary, when dealing with a claim from a joint account holder the official receiver should request documentary evidence, such as payslips, invoices, etc to substantiate any claim to funds in the account. Without the provision of evidence any claim by a joint account holder should normally be rejected. The official receiver, however, has discretion to accept a sworn statement in support of the joint account holder’s claim. Unless the funds can be specifically traced as belonging to the bankrupt or the other account holder the credit balance should be divided equally (for an exception see paragraph 31.5.80). The official receiver should obtain the consent of the joint account holder to the equal division of the credit balance.
31.5.80 Joint accounts – deceased insolvents
On the death of an individual the deceased’s interest in jointly held assets, including a joint bank account, passes to the surviving partner. The official receiver would have no interest in a joint bank account where an Insolvency Administration Order is made against a deceased debtor as the balance on the account would be retained wholly by the other account holder. See Part 1 of Chapter 54 for further information.
31.5.81 Cash at bank - internet and telephone accounts
On-line and/or telephone bank accounts allow the account holder to manage their account through the internet, using a password to access the account and/or by telephone using a pin number or security questions. The official receiver should not access, or attempt to access, the account through the internet or by telephone. The official receiver should not ask for details of the password, pin number or other security information. Where the official receiver is closing the account all debit and/or cash withdrawal cards should be taken from the director(s) or bankrupt. The official receiver should inform the director(s) and bankrupt not to access the relevant account(s) via the internet and/or telephone. The official receiver should record this in a file note and follow up any conversation by letter clearly stating what is expected of the director(s) or bankrupt. Where the official receiver does not close the account (see paragraph 31.5.74) he/she should not take possession of the bank card from the bankrupt.
31.5.82 Cash at bank – overseas accounts
If the official receiver becomes aware of any overseas bank accounts during the preliminary examination he/she should obtain a written authority from the director(s) or bankrupt to obtain information and /or monies from the bank. Either a general authority or a specific authority directed to a particular bank to authorise the provision of information and the remittance any credit balance to the official receiver should be provided. If the official receiver is unable to obtain an authorisation from the director(s) or bankrupt some overseas banks will provide information and remit funds after being provided with a copy of the winding-up or bankruptcy order. Other banks may require a court order from within the relevant jurisdiction. More detailed information on dealing with overseas assets is contained in Chapters 42 and 43.0 with more country specific guidance in Chapters 43.1 to 43.14.
31.5.83 Overseas accounts – translation costs
When corresponding with an overseas bank the letter should be in the language of the recipient bank. It is likely that the reply will be in a language other than English. In order to minimise the potential translation charges the official receiver’s initial enquiry letter should be as brief as possible and include a request asking that any credit balance is remitted to him/her.
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