Dear insolvency practitioner > Chapter 3 > Authorisation and appointment of insolvency practitioners

[Chapter 1] [Chapter 2] [Chapter 3] [Chapter 4] [Chapter 5] [Chapter 6] [Chapter 7] [Chapter 8] [Chapter 9] [Chapter 10] [Chapter 11] [Chapter 12] [Chapter 13] [Chapter 14] [Chapter 15] [Chapter 16] [Chapter 17] [Chapter 18] [Chapter 19] [Chapter 20] [Chapter 21] [Chapter 22] [Chapter 23] [Chapter 24] [Chapter 25]

1.    Action after loss of Authorisation

Where a practitioner ceases to be authorised, it is desirable that a successor practitioner is appointed to deal with any outstanding matters. This can often be achieved in an orderly manner, for example where a practitioner retires and his cases are taken over by a partner. However, it is not simple where an authorisation is withdrawn because the practitioner is considered not to be fit and proper, not least in finding a practitioner willing to be appointed in his place, for example, because there are inadequate records, few or no assets, or suspected dishonesty.

The appointment of a successor practitioner is desirable for a number of reasons, i.e. to:

    1. gather evidence of dishonesty or other misconduct, where relevant;
    2. maintain public confidence in the insolvency profession;
    3. bring an insolvency to a satisfactory conclusion;
    4. trace and realise assets;
    5. pursue claims under the insolvency bond.

At a meeting between the Service and representatives of the authorising bodies it was felt that the initial obstacle, of identifying practitioners willing to accept appointments as successor practitioners, could be reduced by the setting up of a register of individuals willing to accept such appointments.

Practitioners are therefore invited to propose themselves for inclusion on that register, a copy of which will be held by each of the authorising bodies (except the Law Societies) and the Service. Letters, under the heading "Action After Loss of Authorisation" should be addressed to the insolvency practitioners Section, The Insolvency Service, Area 1.10, PO Box 203, 21 Bloomsbury Street, London, WC1B 3QW. The Law Society and the Law Society of Scotland, have in place adequate procedures to deal with the aftermath where the authorisation of a practitioner authorised by them is withdrawn. A "solicitor practitioner" is not barred from being appointed to deal with cases in which an "accountant practitioner" was previously office holder.

Practitioners should be aware that no funds, other than those comprised in the insolvency estate, or received under the insolvency bond, can be made available either by the authorising body concerned or the Service, to meet disbursements incurred or remuneration earned by the successor practitioner.

(First published in Dear IP no. 33, March 1995)


2.  Appointment by the Secretary of State under Section 137 and 296 of the Insolvency Act 1986

This guidance has now been amended.  Please see article 12


3.  Official Receivers’ rotas – clarification of the criteria to be met by an insolvency practitioner for inclusion on rotas for Secretary of State trustee/liquidator appointments

The guidelines to Official Receivers (ORs) concerning entry on to the rotas for Secretary of State trustee/liquidator appointments has recently been updated and this article has been revised to take into account those changes. IPs are reminded that since October 1997 entry on to rotas operated by individual ORs for has been by firm rather than by individual IP. The purpose of the rota is to ensure that ORs cannot be accused of favouring certain IPs. The existence of the rota also seeks to ensure that those concerned with the insolvency are not inconvenienced by the appointment of a distant trustee or liquidator.

The criteria:

Firms may be placed on an OR’s rota where they have a permanently staffed office with personnel who have sufficient knowledge to be able to deal with debtors, bankrupts, directors and creditors at any time within normal business hours.

The IP need not be based in the permanently staff office, but he/she is expected to exercise appropriate supervision of, and give direction to, the day to day casework; conduct regular reviews of papers and files through attendance at that local office or by those papers and files being reviewed at his/her principal office; and be available at the local office for interviews with bankrupts and directors, hold meetings etc. within normal office hours.

Clarification of the criteria:

The criteria are designed to ensure that the firm has a genuine local presence. It has recently become clear to The Service, however, that firms are arranging to use the office of another business as a device to gain a place on a rota. These arrangements (contractual or otherwise) do not satisfy the criteria for entry on to a rota, as the firm does not have an office within the boundaries of the courts served by the OR, or a genuine local presence.

The firm itself must occupy and operate from an office within the boundaries of the courts, permanently staffed by people either employed by, or formally contracted to the firm. There should also be some physical sign of the firm’s occupation of the office, such as a nameplate near or on the door. As long as the criteria are met, there would be no objection to the firm sharing the office premises with another business. Finally, it is the OR’s rota, and so even if satisfied that the firm meets the criteria, he/she may still decide that the firm should not be on the rota. That would, however, be an exceptional situation, and the firm would be notified in writing of the decision and the reasons for it.

Other matters

Slightly different criteria operate with regard to the Regional rotas operated by, for example PRU (Protracted Realisations Unit) in Birmingham, and IPs are told of the respective entry criteria when each rota is drawn up.

General enquiries may be directed to IPU.Email@insolvency.gsi.gov.uk


4.    Timing of giving notice of appointment by a Liquidator/Trustee appointed by the Secretary of State

IPCU processes and certifies Secretary of State (SoS) appointment applications on receipt from the respective OR’s office and, when issuing the certificate of appointment to the OR, provides a covering letter addressed to the IP advising him/her that no creditors’ committee has been established. It also states that the IP may wish to consider convening a General Meeting for this purpose. Additionally, the letter also reminds the IP of the Regulations (and SIP 9) regarding fees and the relevant sanction required.

Sections 137(4) and 296(4) respectively require the appointed office-holder then to give notice of his/her appointment to creditors, or with the court’s permission and in accordance with any directions given, to advertise his/her appointment. The legislation is, however, silent on how soon after appointment this notification should take place.

At a recent meeting between the Monitors of the Recognised Professional Bodies and the Insolvency Service this issue was discussed. The general consensus of the meeting of Monitors was that a period of no more than 28 days after appointment seemed to be a reasonable timescale and that, as a matter of Best Practice, IPs should aim to either give notice of appointment to creditors or issue a notice convening a General Meeting within that period.

General enquiries may be directed to IPU.Email@insolvency.gsi.gov.uk


5.  The Principles for Monitoring of insolvency practitioners

The Secretary of State and the Recognised Professional Bodies (RPBs) have agreed a common set of principles to be adopted when monitoring insolvency practitioners authorised by them.

The purpose of monitoring is to enable the Secretary of State and the RPBs to make an objective assessment of the conduct and performance of practitioners, and to ascertain whether the practitioner is a fit and proper person to be an insolvency practitioner.

The principles cover the responsibilities of the Secretary of State and RPBs, guidance on the frequency of monitoring visits, key monitoring issues, liaison with other authorising bodies, and recommendations as to the content and timing of written monitoring reports.

The agreed Principles are published on the Service’s website at www.insolvencydirect.bis.gov.uk. look under “Information for and about insolvency practitioners”. Practitioners who do not have access to the Internet can obtain a copy of the Principles by telephoning 0207 291 6772.

General enquiries may be directed to IPU.Email@insolvency.gsi.gov.uk


6.   Civil Recovery Scheme – Expressions of Interest in Joining a National Civil Recovery Rota

Article Withdrawn December 2006Please see article 13


7. Guide to Professional Conduct and Ethics

The Authorising Bodies, through the medium of the Joint Insolvency Committee, have been working towards adopting a standardised Insolvency Ethical Guide for all insolvency practitioners. The revised Guide is expected to be adopted by most of the Authorising Bodies on 1 January 2004, with others adopting it as soon as their internal procedures allow.

The changes have been made to achieve standardisation as Stage One of a two stage review of the Guide. Stage Two will consider more substantive changes and is being conducted initially by the Joint Insolvency Committee.

The current amendments are not substantive and should not affect the way in which insolvency practitioners conduct their business.

The standardised guide will be published on The Insolvency Service website.

General enquiries may be directed to IP Policy Section Email: IPPolicy.Section@insolvency.gsi.gov.uk Telephone 020 7291 6772


8. Appointment by the Secretary of State under Section 137 and 296 of the Insolvency Act 1986 – additional guidance on joint appointments in Official Receiver (OR) rota cases

It has been noted that there is some uncertainty and inconsistency as to whether application should be made to the Secretary of State under sections 137 and 296 of the Insolvency Act 1986 for the joint appointment of two or more practitioners in OR rota cases.

The guidelines appearing at Chapter 3, Article 2 of Dear IP state, "In a few cases it may be desirable to appoint joint office holders". For example, a joint appointment might be necessary because of size, complexity or geographical location(s) of the insolvent business. Additionally, some firms favour the appointment of joint IPs for practical purposes. This can have a positive benefit to the case by allowing the appointment of local staff as joint office holder rather than the single appointment of a non-resident partner.

Consequently, applications for joint appointments may be made by ORs when requested by the creditors or where the circumstances of the case warrant it, or where there is unlikely to be a negative effect in terms of costs. Such a negative effect is unlikely to arise where the proposed joint appointees are from the same firm.

If you wish to be appointed jointly with another member of your firm as a matter of course in OR rota cases, it would be helpful if you could notify the relevant OR. When doing so and for the purpose of future appointments, please provide details of your joint appointee (if this is to be constant) and state whether acts done by the liquidator or trustee are to be done by all or any one or more of the office holders (see sections 231(2) and 292(3) of the Insolvency Act 1986).

Practitioners may also like to know that the Inland Revenue have indicated that they no longer wish to be consulted in every case where they are not the petitioner.

General enquiries may be directed to IP Policy Section Email: IPPolicy.Section@insolvency.gsi.gov.uk Telephone 020 7291 6772


9. Action after Loss of Authorisation – Successor Practitioner Register 

In March 1995 The Insolvency Service invited insolvency practitioners to propose themselves for inclusion on a Successor Practitioner Register.  The aim of the Register was to provide a pool of practitioners willing to accept appointment as successor practitioner, primarily following the removal of an authorisation due to unfitness. 

The Insolvency Service has now discontinued the Register.  Each of the Recognised Professional Bodies has developed their own procedures for selecting a successor in such circumstances and the Register is no longer required. 

Where the Secretary of State removes or refuses an authorisation to act as an insolvency practitioner in cases involving unfitness, the insolvency practitioner Database will be used to select a successor practitioner on the basis of location, resources, experience and independence. 

We would like to take this opportunity to thank those practitioners who volunteered themselves for the Register.  

 

General enquiries may be directed to IP Policy Section Email: IPPolicy.Section@insolvency.gsi.gov.uk Telephone 020 7291 6772


10. Regional Trustee and Liquidator Units

As you will no doubt be aware, over the last 18 months the Insolvency Service (the Service) has centralised the trustee/liquidator function that Official Receivers (ORs) carry out into regional units (details below).  Perhaps not surprisingly, these units are called Regional Trustee and Liquidator Units (RTLUs).  The purpose of the RTLUs is to take on all trustee and liquidator work which the OR in the local office would otherwise carry out.  With this in mind, and in line with the emphasis of the Enterprise Act 2002 to ensure that the best return possible is made to creditors, the Service will inevitably actively seek practitioner appointments in fewer asset realisation cases than we have up until now.  This will, in the main, affect cases with income payments orders or agreements (the OR has been retaining more of these cases for some time in any event) and straightforward realisations of assets such as cash at bank or interests in a bankrupt’s home with a willing purchaser.  In addition, it was previously the OR’s practice to offer batches of small credit balance cases; RTLUs will not seek the appointment of a practitioner in these cases but will distribute any balance to creditors.  Bankruptcy cases which are being dealt with by the Service’s Protracted Realisations Unit will not be affected.  Article 3 of Chapter 18 (Dear IP Issue 18) refers to these cases. 

If, in any case, creditors actively seek the appointment of a practitioner, the OR will, as now, do whatever is necessary to effect an appointment, either through a meeting or a Secretary of State appointment.  In such instances it is unlikely that the case will have been transferred to the RTLU.  However, there may be some cases that are initially referred to the RTLU in which it will be appropriate to seek a Secretary of State appointment of a practitioner.  The RTLUs will be using the local office rota system for the referral of such cases. 

 

General enquiries may be directed to oros@insolvency.gsi.gov.uk;   Telephone 020 7291 6824

The RTLUs are/will be located at the following OR’s offices: 

Region

Office

OR

Anglia

Ipswich

Liz Thomas

London

London (includes Croydon)

Christine McCreath

Midlands

Birmingham

Robert White

North East

Stockton

Bob Patterson

North West

Manchester

Paul Cropper

South East

Canterbury

Brian Inglis

South West

Swansea

Ian Carter


11. Appointment of an insolvency practitioner as trustee following a “no meeting decision”

Operational policy guidance has recently been issued to official receivers (ORs) dealing with requests from insolvency practitioners (IPs) who are seeking appointment as trustee following a “no meeting decision”.   

Since the introduction of its new financial regime in 2004 the Service has had a policy of retaining and dealing with straightforward realisation cases with the intention of increasing returns to creditors in those cases. In addition, further operational policy guidance was introduced in October 2005 in situations where insolvency practitioners are seeking appointments following the no meeting decision. In exercising his discretion the OR has an implicit duty to consider what is in the best interests of creditors when deciding to call a first meeting or when seeking a SoS appointment. This guidance relates only to bankruptcy cases. 

The aim of the additional guidance is to:

  • Ensure that the wishes of creditors are taken into account.
  • Ensure that assets are not unnecessarily diminished by the extra cost arising form the duplication of work by an IP in familiarising himself with cases in which there are no known or realistic prospects of additional asset realisations at the time of the request for appointment.
  • Avoid the need for creditors to have to pay the cost of requisitioning a meeting where more than 25% of the creditors are in favour of an appointment.
  • Avoid the need to canvass the views of creditors where less than 25% of the creditors are in favour of nominating an IP in place of the OR.

It applies to requests for the appointment of a particular IP after a notice of no meeting has been issued. 

Where the IP has identified additional recoveries that could be made or can show that they have access to specific information which could bring to light further assets the OR will consider acceding to the request for an SoS appointment. The OR will need to be satisfied that the potential assets amount to more than speculation by the practitioner.  Where the OR is not convinced that further assets will come to light and that the return to creditors could be at risk the following guidance will come into play: 

  1. If the request comes in from less than 10% in value of the creditors the IP or creditor concerned will be asked to seek the support of additional creditors before the request can be considered further.
  1. If the request is made by at least 10% but less than 25% of creditors (in value) the OR will decline but will advise that the creditors concerned can requisition a meeting of creditors, the costs to be borne by them. Where the level of support is below 25% it is arguable as to whether it is reasonable for the majority of creditors to bear the cost of a meeting.
  1. If the request is made by at least 25% but less than 50% of the creditors (in value) the OR will write to all creditors providing an indication of the possible further asset recoveries which have been identified. Where the OR is already likely to make a distribution from the known assets the letter will also detail the potential implications on the distribution level if the IP fails to realise further assets.
  1. If at any time more than 50% by value of the creditors express a wish for someone other than the OR to be appointed the nominated IP will be appointed. 

Where the creditor or the IP representing them has been asked to seek the support of additional creditors the OR will upon request provide a list of creditors. If a creditor is seeking to appoint an IP in order to carry out a detailed investigation this should not be at the potential expense of the other creditors whose interests the OR must seek to protect. It would be for the insolvency practitioner to convince the OR, or in the alternative other creditors, as to the benefits of any proposed  investigation so that they will be persuaded to support the IP’s nomination.  

Any IP who feels that their request has been declined unfairly should write to the appropriate regional director seeking a review of that decision. 


12. Guidelines for the Appointment by the Secretary of State under Sections 137 and 296 of the Insolvency Act 1986

NB article 2 of this chapter has now been withdrawn 

The Guidelines have been changed to enable official receivers to apply to the Secretary of State for the appointment from their rota of an insolvency practitioner as trustee in cases that are two or more years old and where the principle asset is an interest in a dwelling house which at the date of the bankruptcy order was the sole or principal residence of the bankrupt, their spouse/civil partner or former spouse/civil partner without first seeking the views of creditors. 

The change to the Guidelines has been made due to the special nature of these property interest cases, the limited time available to the insolvency practitioner trustee to realise the asset before it re-vests in the bankrupt and the difficulty in consulting creditors given the passage of time since the bankruptcy order.    

A copy of the revised Guidelines are published on the Insolvency Service website at www.insolvencydirect.bis.gov.uk/freedomofinformation/ipps/SoSguidelines.pdf 

Any enquiries regarding this article should be directed towards Insolvency Practitioner Policy Section, Area 5.6, 21 Bloomsbury Street, London WC1B 3QW  telephone: 020 7291 6765 email: IPPolicy.Section@insolvency.gsi.gov.uk


13. National Civil Recovery Rota – an Update

NB article 6 of this chapter has now been withdrawn

This rota was first introduced on 1 January 2004 for Official Receivers to use in cases in which there is potential for civil recovery action but which have no funding from creditors nor can an agreement for repayment be made with the relevant parties. Some 57 firms agreed to go on the rota and to date there have been a total of 23 appointments. 

As can be seen this rota has been rarely used and the Service feels that this may be for a number of factors, including: 

  1. Where a creditor is aware of (or suspects) that there are potential civil recovery actions in a case, he/she will contact an insolvency practitioner at an early stage of the case and an appointment will be made.
  2. As so many practitioner firms are able and willing to take these types of cases – often on a ‘no win no fee’ basis – ORs are able to make the necessary appointments using their local office rotas.
  3. In the more straightforward case, ORs and/or RTLUs will take the action as trustee/liquidator and will realise the assets.

Despite the apparent lack of use of this rota, the Service continues to feel that it fulfils its purpose and acts as a rota of last resort. Consequently, we intend to keep it running. However, if any firm would like to be removed, or added to this rota, then please contact David Chapman/Linda Dellicolli on 020 7637 6397. 

General enquiries may be directed to oros@insolvency.gsi.gov.uk;   Telephone 020 7291 6824


14. Regional Trustee/Liquidator Units (RTLUs): an update

It is now nearly 5 years since RTLUs were created by The Insolvency Service (The Service). The purpose of this article is to give an updated position on the work that these offices undertake. 

Since the introduction of the RTLUs, in addition to the sort of cases in which an official receiver will act as trustee or liquidator of last resort (i.e. those cases in which either there are no assets, or the assets are such that their value is minimal or they are long-term), The Service is keeping more straightforward asset realisation cases, which will result in a distribution to creditors rather than looking to pass such cases out to an insolvency practitioner (IP). However, if creditors have sought the appointment of an IP, Chapter 17 of the Technical Manual sets out the procedure that should be followed. Access to the technical manual is available via the Insolvency Service website at http://www.insolvencydirect.bis.gov.uk/freedomofinformation/index.htm - look under “ 8) Policy and Technical Directorate” 

An RTLU is not a “closings unit” and as such will not usually deal with debit balance closings.  They have been created as specialist units to deal with cases in which: 

(a)   there is likely to be a distribution to creditors; or

(b)   in which the assets are not likely to attract an IP but will be time-consuming for the home OR to deal with.  

In the latter cases, the RTLU will deal with the following: 

a)     The realisation of an estate’s assets (regardless of value) in straightforward cases including (but not limited to) jointly and solely owned property where there is a willing purchaser, jointly and solely owned property where there is no willing purchaser but the value is insufficient to attract the appointment of an IP, property which is in negative equity, shares, life policies, collecting and monitoring payments under an income payments order/agreement (IPO/IPA), and book debts.

b)     Monitoring fast track voluntary arrangements (FTVAs), post creditor acceptance.  This will include processing applications for annulment in these cases, such applications being made without the need to attend at court.

c)      Realising or otherwise dealing with an estate’s interest in long- term assets regardless of value and complexity, where the case will not attract the appointment of an IP. For this purpose a long- term asset is one that cannot be realised quickly by the home office – e.g. a pension policy, a company pension scheme, long-term litigation issues and recovery actions.

d)     The administration of all cases it deals with to a conclusion, including the early discharge process.  

The RTLUs are located at the following offices:  

Region

Office

OR

Contact Number

Anglia

Ipswich

Liz Thomas

01473 383535

London

Croydon

Simon Brown

020 86815166

Midlands

Birmingham

Robert White

0121 335 4505

North East

Stockton

Robert Patterson

01642 628 828

North West

Stoke

Steven Fearns

01782 664100

South East

Canterbury

Brian Inglis

01227 284 350

South West

Swansea

Ian Carter

01792 656 780

General enquiries may be directed to oros@insolvency.gsi.gov.uk;   Telephone 020 7291 6824


15. Information to be included in a blanket authority given by a creditor to an insolvency practitioner  

Where an insolvency practitioner holds an authority to act on behalf of certain creditors it is important that the scope of the authority is clear. To assist official receivers, creditors and insolvency practitioners the following guidance has been prepared and it would be helpful if insolvency practitioners could ensure that any new authority prepared for use in bankruptcies and compulsory liquidations addresses the following issues:  

(i) The authority should be on the headed notepaper of the creditor including the address and registration details.

(ii) The name and job title of the person signing the authority on behalf of the creditor should be printed.

(iii) A statement that the person signing the authority is authorised to give the authority.

(iv) The contact details of the person signing the authority should be included; address, telephone and email if available.

(v) The letter should be signed and dated.

(vi) The authority will be retained by the official receiver for two years after which it will have deemed to have lapsed and should be renewed by the creditor. 

The following wording would be acceptable to official receivers. 

We hereby authorise [name of IP*] to act on our behalf in matters related to all insolvent estates of which we are creditors as follows: - 

1) Pursuant to rules 4.75(1)(g) and 6.98(1)(g) of the Insolvency Rules 1986 to complete and sign forms of proof of debt on our behalf; 

2) Pursuant to rule 8.2(3) of the Insolvency Rules 1986 to complete and sign forms of proxy on our behalf:- 

a) by way of special proxy for the appointment of [name of IP*] as office holder under the provisions of the Insolvency Act 1986, or 

b) by way of special proxy for the appointment of any licensed insolvency practitioner as office holder under the provisions of the Insolvency Act 1986. 

3) To act as our agent and obtain lists of creditors pursuant to rule 12.17 of the Insolvency Rules 1986. 

4) In the event that the official receiver decides to request that the Secretary of State appoint an insolvency practitioner, in all cases where we are the majority creditor, we wish [name of IP*] to be appointed office holder under the provisions of the Insolvency Act 1986. 

Should [name of IP] decline to accept the appointment, on our behalf [name of IP] may agree to an appointment from the official receiver’s rota. 

5) In the event that the official receiver decides to request that the Secretary of State appoint an insolvency practitioner and we are not the majority creditor, [Name of IP*] may on our behalf approve:

an appointment from the official receiver’s rota, or 

b) the appointment of an insolvency practitioner nominated by another creditor. 

Any of the above may be deleted by the creditor and excluded from the authority. Where the official receiver receives a later dated authority from the creditor for another insolvency practitioner it will be assumed that the creditor has withdrawn the earlier authority and the official receiver will be under no obligation to make enquiries.

The official receiver will accept an authority that refers to “an insolvency practitioner from [name of firm]”, rather than a specifically named insolvency practitioner, or in the case of proxy holders “an employee of [name of firm]”, rather than named individuals. 

The Insolvency Service appreciates that some insolvency practitioners already hold authorities which date back some years. For the sake of clarity it would be helpful, if where an insolvency practitioner holds an authority which is more than two years old, for the insolvency practitioner to obtain an amended authority that complies with this new guidance. 

Insolvency practitioners might wish to know that Official Receiver Services (ORS) will maintain details of all authorities on a central database and that this will be accessible by local official receivers and their staff.

Any enquiries regarding this article should be directed towards Alex Cleland, Official Receiver Services, Insolvency Service, 21 Bloomsbury Street, London WC1B3QW; telephone: 07772 795 383 email : alex.cleland@insolvency.gsi.gov.uk  

General enquiries may be directed to OROS@insolvency.gsi.gov.uk ; telephone: 0207 291 6772


16. Urgent Secretary of State appointments – agreements in principle 

Insolvency practitioners may be aware that the Insolvency Practitioner Unit of the Insolvency Service (“IPU”) has delegated responsibility on behalf of the Secretary of State to consider applications from official receivers for the appointment of a trustee or liquidator in place of the official receiver in circumstances where it is not expedient to hold a first meeting of creditors.   Urgent applications are made by telephone to IPU in order to seek agreement of the appointment and most importantly agreement of the effective date. 

Following that agreement, the official receiver will send the appropriate form to IPU together with two draft certificates of appointment to be signed by IPU on behalf of the Secretary of State and returned to the official receiver to be handed over to the appointed insolvency practitioner together with other appropriate documents. 

Instances have arisen where insolvency practitioners acting in the capacity of duly appointed office holders have encountered difficulty in carrying out their role immediately upon appointment due to the delay in receiving the certificate of appointment.   

Accordingly, in the interests of providing best public service, in future where an urgent appointment has been sought and agreed between the official receiver and the Secretary of State, IPU will despatch a signed copy of the certificate of appointment direct to the insolvency practitioner, the other copy will be sent to the official receiver as normal. 

The new process applies only to urgent agreements in principle. In routine Secretary of State appointments the certificate of appointment will be sent to the official receiver for handing over to the insolvency practitioner together with the case records.     

Any enquiries regarding this article should be directed towards Joe Clogan at Insolvency Practitioner Unit, Fourth floor, Cannon House, 18 Priory Queensway, Birmingham, B4 6BS;  email: joe.clogan@insolvency.gsi.gov.uk 

General enquiries may be directed to email IPU@insolvency.gsi.gov.uk


17.  Publication of Official Receiver rotas on Insolvency Service website 

The Insolvency Service has published details of the rotas used by Official Receivers when seeking the appointment of insolvency practitioners as trustee or liquidator. 

The rotas can be found on our website at the link below: 

http://www.insolvencydirect.bis.gov.uk/foi08/cat6.htm 

Insolvency practitioners are reminded that decisions as to whether or not to include an insolvency practitioner on any particular rota are a matter for the relevant Official Receiver.  Any queries regarding the operation of the local rota, or requests for information to be updated/corrected, should be addressed to the relevant Official Receiver. 

Guidance for Official Receivers on the criteria for inclusion on a rota are also available on our website, at the following link: 

http://www.insolvencydirect.bis.gov.uk/foi08/docs/Guidelines%20for%20Official%20Receivers%20on%20Rotas.doc 

Any enquiries regarding this article should be directed towards Lydia Chown, Official Receiver Operations Section, 21 Bloomsbury Street, London WC1B 3QW. Telephone: 020 7637 6393,  email: lydia.chown@insolvency.gsi.gov.uk 

General enquiries may be directed to IPPolicy.Section@insolvency.gsi.gov.uk 

Telephone: 020 7291 6772


18. Obtaining insolvency appointments through on-line introducers  

It has come to The Insolvency Service’s attention that a number of insolvency ‘introducer’ businesses have been advertising their services on the internet, particularly, although not exclusively, in the context of pre-pack administrations.  A number of these websites appear to be making dubious statements which may be misleading, unethical or factually incorrect.  Examples of such statements include: 

  • Statements to the effect that a company’s debts can be dumped and the business acquired for little/nominal consideration or at preferential rates.

  • Statements suggesting that no investigation would be carried out into the affairs of a company.

  • Statements which claim that as part of the process they can help avoid making payments under personal guarantees.

  • Statements suggesting that the deal will be arranged with the introducer and a “trusted” insolvency practitioner will be used to complete the deal.

The Insolvency Service is concerned that this type of advertising may result in businesses that may in fact be viable or otherwise saleable being sold back to existing management without any attempt to undertake proper marketing or valuation exercises and that this may result in reduced realisations for creditors.   

The Insolvency Service has received a number of representations from interested parties expressing concern about this issue and is concerned to ensure that insolvency practitioners accepting work from these sources have the appropriate safeguards  in place to ensure that actual or perceived threats to the fundamental ethical principles are eliminated or reduced to an acceptable level. 

Insolvency practitioners may therefore wish to take particular care when accepting appointments from such sources and may wish to consider that directors could have received pre-insolvency advice that is potentially inaccurate and/or misleading.   

The Insolvency Service is aware that only a very small number of disclosures to creditors in pre-pack administrations pursuant to SIP 16 identify that the source of the insolvency practitioner’s introduction was such a business entity providing advisory or introductory services.  Insolvency practitioners are reminded that if they obtain an introduction to the company through such an entity’s involvement then they are obliged to disclose this fact to creditors. 

Misleading advertising and the Insolvency Ethical Code 

In the context of the advertising content contained in the websites of insolvency introducers, The Insolvency Service wishes to draw insolvency practitioners’ attention to paragraphs 63 to 69 “Obtaining insolvency appointments” of the Insolvency Code of Ethics (ICE). 

Paragraph 63 of ICE provides that the payment or offer of any commission or valuable consideration towards the introduction of an insolvency appointment is inappropriate.  The only exception to this being whereby specific arrangements are in place with an employee of the insolvency practitioner whose remuneration is based in whole or part on introductions obtained. 

Paragraph 65 states that before accepting an insolvency appointment the insolvency practitioner should satisfy himself that any marketing or advertising which may have given rise to the appointment was fair, not misleading, does not contain unsubstantiated statements and complies with relevant codes of practice in relation to advertising.  

Paragraph 66 states that any advertisements or other marketing should be clearly distinguishable as such and be legal, decent, honest and truthful. 

Paragraph 69 provides that where an insolvency practitioner or his firm advertises for work via a third party, it is the responsibility of the insolvency practitioner to ensure that third party follows the advertising guidance in the ICE.   

The Insolvency Service therefore considers that insolvency practitioners: 

  • Should not make any payment to an introducer unless it is of an employment nature.

  • Are responsible for ensuring that any advertising or marketing material from which they obtain insolvency appointments, whether produced by a third party or employee, is fair, not misleading and substantiated.

  • Should be aware that the involvement of a business giving pre-insolvency introductory advice, particularly in the context of pre-pack sales to connected parties, may give rise to actual or perceived threats to the fundamental ethical principles.

  • Should disclose the involvement of any such business in any SIP16 disclosure where the involvement of the business led to the introduction of the office-holder to the company and otherwise in reports to creditors where SIP16 does not apply.

  • Should not accept appointments where potential threats to the fundamental ethical principles cannot be eliminated or reduced to an acceptable level.

The Insolvency Service will report any insolvency practitioner to their authorising body where we become aware that insolvency appointments have been obtained on the basis of advertising that is in breach of the ethical code, or where the insolvency practitioner has not taken appropriate steps to eliminate or reduce threats to the fundamental ethical principles by making appropriate disclosures to creditors.

Any enquiries regarding this article should be directed towards: Toby Watkinson, IP Policy Section, Area 3.7, 21 Bloomsbury Street, London WC1B 3QW; telephone: 020 7637 6566;  email: toby.watkinson@insolvency.gsi.gov.uk  

Enquiries regarding this article may be directed to IPPolicy.section@insolvency.gsi.gov.uk  Telephone:  0207 291 6772

 


19. Notice to the Secretary of State of application for block transfer of cases

The Insolvency (Amendment) Rules 2010 made specific provisions for where an insolvency office-holder dies, retires from practice, or is otherwise unable or unwilling to continue in office and it is expedient to transfer some or all of his or her cases to one or more successor office-holders in a single transaction. These provisions were inserted into Chapter 1A of the Insolvency Rules 1986 and came into effect in April 2010.

One of the new provisions, Rule 7.10C(6) of the Insolvency Rules 1986, requires that an applicant must give notice of the application for the block transfer of cases to the Secretary of State at least five business days before the hearing of the application.

This article is to clarify that such notice, in the form of a copy of the application and any supporting documentation, should be sent to Insolvency Practitioner Policy Section, the contact details of which are below. They should not be sent to the Treasury Solicitor or directly to the Secretary of State at the Department for Business, Innovation & Skills of State as this may cause delay.

Any enquiries regarding this article should be directed towards Steve Lamb of IP Policy Section,  telephone:  020 7637 6698, email: steve.lamb@insolvency.gsi.gov.uk

General enquiries may be directed to email  IPPolicy.Section@insolvency.gsi.gov.uk; Telephone 020 7291 6772


20. Insolvency appointments in respect of Registered Social Landlords in Scotland

The Scottish Housing Regulator (SHR) would like to draw insolvency practitioners attention to the fact that they recognise the potential for insolvency appointments to be made in respect of registered social landlords (RSLs) and the requirement to be notified of such appointments under the Housing (Scotland) Act 2010. Without the appropriate notification to SHR these appointments would be invalid.

SHR is the independent regulator of social landlords in Scotland. It regulates around 180 RSLs and the housing activities of Scotland's 32 local authorities. The register of social landlords is available on the SHR website.

SHR’s statutory objective is to safeguard and promote the interests of current and future tenants, homeless people and others who use services provided by social landlords.

SHR was established by the Housing (Scotland) Act 2010 (the Act) and is accountable directly to the Scottish Parliament.

The Act contains a statutory framework similar to that contained within the Housing (Scotland) Act, 2001, in relation to provisions relating to registered social landlords (RSLs) and insolvency.  Part 7 of the 2010 Act gives SHR a formal role to intervene and try to rescue a registered social landlord facing insolvency, similar to the 2001 provisions.  However, Part 7 does differ in places from the 2001 Act, and a broad overview of some of the provisions of Part 7 which are likely to impact on the work of insolvency practitioners dealing with RSLs are outlined here.

Part 7 contains two mandatory notification requirements to SHR, both before and after insolvency steps have been taken.  In relation to steps taken before insolvency, any person taking any of the following steps in respect of an RSL must notify SHR before the step is taken. These steps include: 

  • Presenting a petition for the winding up of an RSL;
  • Giving notice (in accordance with the RSL’s constitution) of the proposal of a resolution for the winding up of that RSL;
  • Applying for, or making an administration order in respect of an RSL which is a registered company;
  • Appointing an administrator in respect of an RSL which is a registered company; and
  • Any step taken by a person with a view to enforcing a security over an RSL’s land as set out in the Determination issued by SHR. For example, the intimation of any assignation of rents or other receipts arising from land to the party against whom the assigned rights are held. (This Determination is published on the SHR website).

Although the Act does not specify the length of the notice period, failure to notify SHR prior to taking such a step will render the step ineffective.  Notification under section 73(1) (a) is therefore essential.  By way of example, where an insolvency practitioner is appointed to an RSL, they should check that such notification has occurred to ensure their appointment is valid.

Section 73(1) (b) also imposes a duty to notify the SHR as soon as is reasonably practicable after such a step is taken. 

Once any of the above steps is taken, a moratorium on the disposal of the RSL’s land (including heritable property and existing or future interests of the RSL in rent or other receipts arising from the land) is triggered for a specified period, during which the SHR requires to give its consent to any such disposal.  Without regulatory consent, the transaction is void.  This is in addition to any moratorium which may be in place under the Insolvency Act 1986.

Whilst the moratorium is in place, SHR has statutory powers under Part 7 to appoint an interim manager to manage the activities of the RSL, during which SHR can make proposals regarding the future ownership and management of the RSL’s land. Statutory consultation with the RSL, its secured creditors, and the insolvency practitioner and other parties identified in Part 7 will be necessary concerning those proposals.  If agreed by all of the RSL’s secured creditors, with or without modifications, they are binding on all parties.  SHR can also appoint a manager to give effect to these proposals, if agreed.

In such scenarios, there will undoubtedly be cross over in important aspects of work between an insolvency practitioner dealing with the RSL, and a manager appointed by SHR. SHR will seek to liaise with the insolvency practitioner at the outset to identify the different roles and responsibilities.

Any enquiries regarding this article, including the Determination issued by SHR, should be directed towards:

Eleanor Sneddon, Inspector, Support & Intervention, telephone 0141 305 4060, email: Eleanor.sneddon@scottishhousingregulator.gsi.gov.uk

Eileen MacDonald, Solicitor, telephone 0141 305 4179,
email: Eileen.macdonald@scottishhousingregulator.gsi.gov.uk


21. Obtaining insolvency appointments through on-line introducers

Dear IP Issue 46 published in July 2010 refers to obtaining insolvency appointments through on-line introducers. The article highlighted concerns that insolvency “introducer” businesses have been advertising their services on the internet, particularly, though not exclusively, in the context of pre-pack administrations.  The article drew insolvency practitioners attention to their responsibility under the Insolvency Code of Ethics, in particular Paragraphs 63-69 “obtaining insolvency appointments”.

The Insolvency Service remains concerned that the content of such advertisements could still be misleading, and could persuade a director of a company to take a decision that might not necessarily be in the best interests of either the company or its creditors. Recent examples discovered include:

  • Statements referring to a % of debts to be written off
  • Statements indicating that the interests of creditors do not rate as highly as those of the directors
  • Statements purporting to quote government statistics which are inaccurate
  • Statements that might lead the company to believe they are dealing with an independent company when there is in fact a clear link with a firm of insolvency practitioners.

Insolvency practitioners are referred to the contents of Dear IP Issue 46 and are reminded of their responsibilities under the Insolvency Code of Ethics in relation to obtaining insolvency appointments.  Before agreeing to accept any insolvency appointment, an insolvency practitioner should consider whether acceptance would create any threats to compliance with the fundamental principles of the Insolvency Code of Ethics.

The Insolvency Service will continue to refer insolvency practitioners to their authorising body where appropriate.

Any enquiries regarding this article should be directed
towards Catherine Collinson, 4 Abbey Orchard Street, London, SW10 2HT, telephone:  020 7291 6873,  email:  catherine.collinson@insolvency.gsi.gov.uk

General enquiries may be directed to email: IPRegulation.Secion@insolvency.gsi.gov.uk 


22. Notice to Secretary of State of application for block transfer of  cases 

This is a reminder to those involved in court applications for block transfer of insolvency cases of the requirement for applicants to give notice of the application to the Secretary of State at least five business days before the hearing of the application.

Dear IP Article 19, Chapter 3 of Issue No. 53, provided further information on complying with this requirement, which is contained in  Rule 7.10c (6) of the Insolvency Rules 1986. It also clarified that such notice, in the form of a copy of the application and any supporting documentation, should be sent to Insolvency Practitioner Regulation and marked for my attention, the contact details of which are below. They should not be sent to TSols or directly to the Secretary of State at the Department for Business, Innovation & Skills as this may cause delay.  

Any enquiries regarding this article should be directed towards Steve Lamb of IP Regulation Section, telephone:  020 7637 6698,
email: steve.lamb@insolvency.gsi.gov.uk

General enquiries may be directed to email IPRegulation.Section@insolvency.gsi.gov.uk; Telephone 020 7291 6772

 

 

[Chapter 1] [Chapter 2] [Chapter 3] [Chapter 4] [Chapter 5] [Chapter 6] [Chapter 7] [Chapter 8] [Chapter 9] [Chapter 10] [Chapter 11] [Chapter 12] [Chapter 13] [Chapter 14] [Chapter 15] [Chapter 16] [Chapter 17] [Chapter 18] [Chapter 19] [Chapter 20] [Chapter 21] [Chapter 22] [Chapter 23] [Chapter 24] [Chapter 25]