Closing a Case (ISCIS)

Closing a Case (ISCIS)

December 2014 - for cases closed on or after 1 December 2014 please refer to technical notice T34-14 before reading this chapter.

May 2012

Introduction

1. When should a case be closed?

When the administration of a case is for all practical purposes complete and any assets have been realised, in order to close the case the official receiver must apply to Estate Accounts and & Insolvency Practitioner Services (EAIPS), acting on behalf of the Secretary of State, for his/her release as trustee or liquidator.  With the implementation of ISCIS this process has been heavily automated.

When the official receiver is released he/she is discharged as of that date from all liability in respect of what he/she has done or anything he/she has failed to do in the administration of the estate.

 

2. What must be done before a case can be closed?

(Amended September 2014)

Prior to the official receiver applying for release, a thorough review of the file should take place to ensure that all administrative matters have been dealt with and that all ISCIS screens have been updated with the correct information.  The performance of these checks ties in with the ‘Perform Manual Checks for Release’ workflow task (see procedure paragraph 23). If there are funds in the estate the official receiver should distribute them as soon as possible (See procedure paragraph 10). A list of checks that should be made as a minimum is as follows:

  • check all assets that were mentioned in the Statement of Affairs, or which have subsequently come to light have been realised or otherwise accounted for;
  • check all asset details are recorded on ISCIS (‘Assets’ tab). You will be unable to apply for release if there are any assets that have not been marked as realised on ISCIS (‘Assets’ tab).  Assets should not be added to the unrealised asset register as a matter of course as this register is reserved for long-term realisations;
  • amounts realised for any assets are shown on the ‘Funds’ tab;
  • all fees and disbursements have been charged correctly and any payments made in due order of priority (‘Funds’ tab).  This is done by selecting the ‘general fund’ from within the ‘funds’ tab and selecting ‘view transactions’;
  • any insurance effected has been cancelled with the premium(s) paid;
  • all correspondence has been answered and correctly dealt with;
  • any agents have accounted for asset realisations and their accounts are correct and have been paid;
  • any items held in the cashier’s safe for safe keeping have been dealt with appropriately;
  • a decision has been made concerning the preservation or destruction of any accounting records;
  • in company matters, it must be determined whether early dissolution of a company is necessary. This may be the case where the realisable assets are insufficient to cover the expenses of the winding-up, and the affairs of the company do not require any further investigation. Early dissolution is intended to save time in case administration. (see paragraph 12);
  • in company matters, it must be determined whether a deferral of the dissolution of a company is necessary, e.g. where there are prosecution/disqualification proceedings, or an occupational pension scheme is in existence or an administrative receiver or Law of Property Act receiver is in office. Notice using form RELADR (Notice of Intention to apply for release where there is a receiver in office) should be given before release is applied for (see paragraph 17).  Details of the reasons behind the deferral of dissolution should be noted on ISCIS (‘Case Header’ tab >‘View Case Party‘ screen > ‘Dissolution’ screen).  There is a workflow task that will be generated as the closing process is progressed;
  • where the case is identified for transfer to the LTADT make sure that the LTADT guidance has been followed, prior to transfer. See the Guidance for cases being sent to the LTADT and Protocol for transferring cases to the LTADT on the LTADT intranet page.  
  • Check that there are no outstanding remittances held in suspense or in failed batches (ISCIS ‘Funds’ tab).

On a migrated case the ‘Perform Manual Checks for Release’ workflow task may not generate automatically.  In this situation the ‘case clerk role’ should be allocated to another user and reallocated back.  This action will prompt the workflow task to generate.

 

3. Estate Accounting

The fees and expenses to be charged for the functions and duties of the official receiver are set down in legislation in both winding up and bankruptcy proceedings. The relevant legislation depends on when the insolvency order was made. 

 

4. Estate accounting in cases where the insolvency order was made on or after 1 April 2004

If the insolvency order was made on or after 1 April 2004, the Insolvency Proceedings (Fees) Order 2004 (as amended) and Insolvency (Amendment) Regulations 2004 will apply. The only fees chargeable in cases are the Administration fee, the Secretary of State fee and the OR’s Time and Rate fee

 

5. What is the Administration fee?

The case administration fee for compulsory company (Fee W1) and bankruptcy cases (Fee B1) is charged on the making of the winding-up order and bankruptcy order respectively. A table of historical fees can be found in Technical Manual (TM) 36.5 Annex C. The fee covers the stationery fee as well as all common official receiver disbursements such as Gazettes, travel and subsistence and some advertising costs. Following the implementation of the Insolvency Proceedings (Fees) (Amendment) Order 2007 the administration fees were extended to include costs associated with the duty of the official receiver to investigate and report upon the affairs of companies in liquidation and bankrupts. However, disbursements  incurred during the realisation and distribution of assets e.g. insurance premiums, agent’s costs, advertising costs relating to distributions are not included and should be charged to the relevant estate. See CHM part : Distributions

 

6. What is the Secretary of State fee?

The Secretary of State (SOS) fee is charged as a percentage on total 'chargeable receipts' paid into the Insolvency Services Account (ISA).

However, different criteria applies for charging this fee depending on when the insolvency order was made:

  • following the introduction of the Insolvency Proceedings (Fees) (Amendment) Order 2007, there is no SOS fee payable on funds paid into the ISA on or after 1 April 2007, for cases where the insolvency order was made before 1 April 2004. (See TM Chapter 36.36)
  • there is no SOS fee payable on funds paid into the ISA on or after 6 April 2009, for cases where the insolvency order was made on or before 31 March 2005. (See TM Chapter 36.38)
  • where the insolvency order was made on or after 1 April 2005, the SOS fee(fee B2 / W2), calculated as a percentage of total chargeable receipts,  is not payable on the first £2,000 banked. Once the net realisations for the case reaches £2,000 the fee is charged at 17%. There is a maximum limit that may be charged on realisations above £80,000 therefore the maximum SOS fee cannot exceed £13,260 (17% of £78K). There is also no SOS fee chargeable on that part of the total receipts that exceeds the bankruptcy ceiling. (See TM Chapter 36.39).
  • For bankruptcy or winding-up orders made on or after 6 April 2010 the SOS fee has now been re-structured as detailed in the table below.

SoS Table of percentage fee to be charged

Bankruptcy

Company

0% charge on the first £2,000

0% charge on the first £2,500

100% charge on the next £1,700

100% charge on the next £1,700

75% charge on the next £1,500

75% charge on the next £1,500

15% charge on the next £396,000

15% charge on the next £396,000

1% charge on the balance  

1% charge on the balance  

The total fee paid is capped at £80,000

 

The total fee paid is capped at £80,000

  

 

 

 

 

 

 

 

 

 

 

7. What is the official receiver’s general remuneration (OR’s Time and Rate)

(Amended September 2014)

When the official receiver acting as trustee or liquidator makes a distribution to creditors or performs any task as liquidator or trustee for which a fee is not otherwise provided, he/she may charge general remuneration for the services provided. This fee is designed on a time and rate basis, i.e. there is an hourly rate for each grade and is calculated according to the time spent by each member of staff in carrying out specific duties.

The LTADTs deal with payment of dividends to creditors and as such are responsible for charging this fee. More information on this fee when distributing funds to creditors can be found in Case Help Manual part : Distributions - Bankruptcy and Companies- Introduction – paragraph 15.

Between the two sets of figures, such as non-realised assets, a brief explanation should be given in the comments section of form NORAD. In bankruptcy cases, reference is made to the position of the bankrupt's discharge, so as not to cause any confusion to creditors or to the bankrupt him/herself. In company cases a comment should be made where there is any proposed application for the deferral of the company's dissolution. Both forms are available on ICSIS ‘Docs’ tab and should be produced in accordance with the automatically generated workflow for release.

Conclusion of the process via the use of workflow will result in the case being closed financially, this will be reflected on the ‘Case Header tab by the  ‘Financial Case Status’ showing as closed.

 

8.  Estate accounting in cases where the insolvency order was made before 1 April 2004

For those cases where the bankruptcy or winding-up order was made before 1 April 2004, the provisions of the Insolvency Fees Order 1986 and  Insolvency Regulations 1994 still apply.

Technical Manual Chapter 36 Part 1 provides comprehensive details of all the fees and disbursements payable and how they should be charged to the estate account in all cases both pre and post 1 April 2004. 

VAT is charged on the official receiver’s realisation fees and any time and rate fees, regardless of whether or not the estate is registered for VAT.

 

9.How do I start the process for release ?

Certain fields within ISCIS are required to be completed before the release process can be progressed successfully, these are:-

  • Workflow container needs to be started – Solution: using the ISCIS ‘Workflow’ tab select ‘Create Workflow Container’.  The case workflow will not always be created instantaneously so the user may have to navigate away from the workflow tab and go back to it after a few minutes.  DO NOT PRESS THE ‘Create Workflow Container’ BUTTON MORE THAN ONCE.  On a migrated  case the user who set up the workflow should immediately terminate any workflow task created except any ‘Release’ task that may have appeared.
  • ‘Case Owner Type’ on the ‘Case Header’ tab must not be blank – Solution: Using the ‘Creditors’ tab, change the ‘IP Appointment Route’ to reflect the current position. 
  • ‘IB’(Interest bearing) flag needs to be de-selected on the ‘funds’ tab – Solution: Using the ISCIS ‘Funds’ tab view the case fund summary.  If any of the funds are interest bearing (i.e. the fund has a tick in the fund row of the ‘IB’ column) the fund should be selected and using the ‘Update fund’ button the fund should be viewed and the interest bearing flag de-selected.

Once this has been done and a case is ready to be closed and release applied for, the ‘Release’ workflow on ISCIS should be initiated by selecting the ‘Release’ button on the ‘Case Header’ tab. Prompts and instructions will be displayed throughout the process but it should be noted that in company cases further checks will need to be made to enable the release to be actioned on ISCIS. These include checks to be made to see if an administrative receiver is in place (shown in the ‘Linked Parties’ tab), if you are unsure about this use a ISCIS Case Search or Companies House, company dissolution details and confirmation that the winding-up order has been recorded at Companies House. 

 

10. Notice to creditors

ISCIS will generate a workflow to create NORAD documentation. The official receiver must send notice of his intention to apply for release (form NORAD) to all creditors of which he/she is aware, as recorded on ISCIS ‘Creditors’ tab. It is not necessary for the creditor to have lodged a proof of debt. The bankrupt should also be sent a copy of the form NORAD under cover of form TRLTB but in company cases, contributories do not receive one. 

The notice must also enclose an account summary of the official receiver’s receipts and payments as trustee or liquidator (form ACCSUM), showing the original estimated value of assets compared to that which has been realised. If you are unable to obtain an automatically populated ACCSUM from ISCIS you will be able to complete one manually through the ‘Docs’ tab. This should be self-explanatory, but if there are any discrepancies between the two sets of figures, such as non-realised assets, a brief explanation should be given in the comments section of form NORAD. In bankruptcy cases, reference is made to the position of the bankrupt's discharge, so as not to cause any confusion to creditors or to the bankrupt him/herself. In company cases a comment should be made where there is any proposed application for the deferral of the company's dissolution. Both forms are available on ICSIS ‘Docs’ tab and should be produced in accordance with the automatically generated workflow for release.

Conclusion of the process via the use of workflow will result in the case being closed financially, this will be reflected on the ‘Case Header tab by the  ‘Financial Case Status’ showing as closed.

 

11. Notice to creditors in early discharge cases (updated October 2013)

In bankruptcies where the order was made on or after 1 April 2004 and prior to 1 October 2013, and the case has been identified as being suitable for 'early discharge' the official receiver may notify creditors of his/her intention to apply for release at the same time as informing them of the bankrupt's possible early discharge using form EDNCR (Letter to creditors advising early discharge to be granted combined with release notice).When early discharge details have been entered on ISCIS (‘Case Header’ and  ‘Data Store’ tabs) a workflow will be generated to process the document production. For more information on the early discharge process please refer to the Case Help Manual part: Discharge from Bankruptcy.

 

12. Notice to creditors in early dissolution cases

In company cases the official receiver when liquidator, may apply to the Registrar of Companies for the early dissolution of a company. This is done where the company has no assets, or the total value of any assets is insufficient to cover the costs of its winding up and the affairs of the company do not need any further investigation. The time saved in unnecessary administration is achieved by condensing all the obligatory notices to creditors and contributories into one form, NED, ISCIS ‘Docs’ tab – ‘Dissolution – notice under s202(3) of proposed application for early dissolution’.  In effect this combines the no meeting notice with the report to creditors and also acts as a ‘closing notice’ (notice of official receiver’s intention to apply for release). 

For more information on this process see Case Help Manual part: Early Dissolution.

 

13. Creditors’ (and bankrupt’s) ability to object to release

The creditors have 21 days from the date of the notice to object to the official receiver’s release before EAIPS acting on behalf of the Secretary of State, grants the official receiver his/her release as trustee or liquidator. The creditors are informed in the notice that objections should be made in writing and addressed to the Secretary of State for Business, Innovation and Skills, Estate Accounts and & Insolvency Practitioner Services, Level 3, Cannon House, 18 Priory Queensway, Birmingham, B4 6FD (or DX 713899 Birmingham 37). In the event that a creditor sends his objection to the official receiver by mistake, EAIPS should be notified by telephone to ensure that the application for release is withdrawn pending receipt of the objection. The objection should then be forwarded as a matter of urgency to EAIPS. 

 

14. What happens if a creditor objects to the official receiver’s release?

If any objections are made to the official receiver's release, the matter will be considered by EAIPS, who may liaise with the official receiver if necessary. If the objection is considered to be valid, a holding letter is sent to the objector and the matter is then referred to Technical Section for adjudication. Details of the objection will be shown on the ‘Case Header’ tab – Release status. When the matter is resolved, EAIPS will send a copy of the certificate of release to the objector.

Once approved there is no mechanism for the official receiver's release to be revoked. If an objection is raised after 28 days and the release has been granted, the objector is given the option to pursue the matter as a complaint, whereupon the normal complaints procedure would be followed. 

 

15. Why would a creditor object to the official receiver's release?

Some creditors will tend to object in principle to the release of the official receiver, as they consider that by the official receiver being released the director/bankrupt/partner/ is "getting off lightly". Other creditors may have concerns that the director/bankrupt/partner is enjoying a good lifestyle whilst they are suffering as a result of the losses incurred due to the insolvency. It is imperative, therefore, to ensure that all creditor correspondence is dealt with before applying for release.

 

16.  How do you apply to the Secretary of State for the release of the official receiver as liquidator or trustee?

Once all the workflow tasks have been completed by the official receiver a workflow task to check the case’s suitability for release will be sent to EAIPS (OR Release Team workflow group).  There will be a 28 day delay to see if any objections to release are received.  Once those 28 days have elapsed and if no objections have been received the system will automatically grant the official receiver’s release.

 

17. Deferred Dissolution

When the official receiver is released as liquidator, EAIPS will send notice to Companies House that the winding up is complete and the Registrar of Companies will then proceed to dissolve the company at the end of three months, beginning with the day on which the notice is received by the Registrar of Companies. Where an administrative receiver, Law of Property Act receiver or an administrator of a pension scheme is in office however (‘Linked Parties’ tab), the official receiver must take steps to ensure that dissolution is delayed or "deferred".  There is a workflow task to ensure that these checks are made.

The official receiver’s application for release need not be delayed unless there is some prospect of surplus money being available from the administrative receiver after the debenture holder has been paid. The official receiver can still apply for release, but at the same time he/she must apply for the dissolution of the company to be deferred usually for two years to allow the receiver sufficient time to complete his/her work. (Form DSNDIR).

Before applying for release, the official receiver must write to any administrative receiver, Law of Property Act receiver or an administrator of a pension scheme in office stating that, unless he/she hears to the contrary, the official receiver intends to apply for release and will request that the Secretary of State defers the dissolution of the company for two years from the date that release is granted (form RELADR). At least 28 days should be allowed for a response from the receiver.

Where there are outstanding disqualification or prosecution proceedings, an application should be made for the dissolution to be deferred for six years. Similarly, where the winding-up of an occupational pension scheme remains to be concluded, an estimate of the time that it will take to complete is required and the appropriate period of deferral (in whole years) should be applied for. (Form DSNDIR).

For more detailed information please see Case Help Manual part: Deferral of Dissolution 

 

18. What happens when release is granted?

When release is granted, EAIPS will send a certificate of release to the court but a certificate will not be forwarded to the official receiver. In company cases, EAIPS will prepare the notice that the winding-up is complete (form NOTCH) and forward this to Companies House together with any deferral of dissolution directions.

A copy of the paperwork sent to Companies House regarding deferral of dissolution will be sent to the official receiver for saving to the official receiver’s file and recording on ISCIS (Dissolution notes, to be found when selecting ‘View’ on the ‘Case Header’ ‘View Case Party’ screen).

The date of release will be automatically recorded on ISCIS following the write off of any debit or nil balance.

 

19. Partnerships

Release should be applied for in respect of every estate account opened regarding a winding-up order or bankruptcy order made in relation to a partnership. When dealing with a joint bankruptcy partnership (Article 11) a separate application should be made in each estate including the partnership estate. Although there is no winding-up order made against the partnership, on the making of the bankruptcy order in a joint petition matter, the official receiver becomes trustee of the partnership. A financial account is therefore opened for the joint estate and release must be applied for in the joint estate at the same time as each of the members' separate estates.

For more detailed information on this subject please refer to the Case Help Manual part: Distributions - Partnership 

 

Where can I find out more?

The Insolvency Act 1986

Section 174 Release (winding up by the court).

Section 299 Release of trustee

The Insolvency Proceedings (Fees) (Amendment) Order 2009

Insolvency Rules

4.124 Release of Official Receiver.

6.136 Release of Official Receiver.

Technical Manual

Chapter 36 Estate accounting

Chapter 37 Release of OR as liquidator or trustee

Chapter 38 Dissolution

Case Help Manual

Deferral of Dissolution

Early Dissolution

Discharge from Bankruptcy

Partnerships

Distributions: Bankruptcy and Companies

Distributions: Partnership

ISCIS Release Guidance

Forms to be used:

ACCSUM       Account Summary

DSNDIR        Company Dissolution

EDNCR         Notice of OR’s intention to file early discharge

NORAD         Notices, Release and Dividend

NOTCH         Notices to Companies House

RELADR        Release, notice to administrative receiver re release

TRLTB          Trustee Release, Letter to Bankrupt

 

Closing a Case - Bankruptcies flowchart 

Closing a Case - Companies flowchart 

 

Procedure

ISCIS tabs that must be used to record/view information are given in brackets e.g. (‘Docs’).

Preparing a case for closing

All cases

1 Confirm that all actions have been completed and recorded on ISCIS and all correspondence dealt with.

2 Check that all information has been correctly recorded on ISCIS (‘Case Header’ tab), including all personal details, such as date of birth, national insurance number, etc.

3 Check that full details have been recorded on ISCIS including trading and VAT registration number(‘Trading/COI’ tab)

4 Check that all assets have been dealt with and recorded on ISCIS (‘Assets’ tab). Details of unrealised assets must be completed.

5 Check meeting details recorded on ISCIS (‘Creditors’ tab).

6 Check all creditors information and proofs of debt have been entered on  ISCIS ‘ Creditors’ tab,

7 Check the case books and papers have been recorded on ISCIS ( ‘Data Store’ – 4.5/4.6(bankruptcy) or 3.0/3.1(company)). Where they are currently under the official receiver's control, ensure that form BPOGD (Books & Papers, Notices to OGDs) has been sent to HMRC. If this has not been done previously, send the form now and allow at least 6 weeks for a reply. Check with examiner whether records are to be preserved or destroyed to prevent unnecessary and costly storage. For further information on this procedure, please refer to the Case Help Manual part : Books and Papers : Receipt, handling, recording and destruction.

8 If case marked FI (‘Conduct Assessment’ tab), check with examiner that case can be closed.

9 Using the ‘Funds’ tab check that all statutory fees, official receiver’s disbursements and any realisations and/or agents costs have been charged correctly.  It is important that none of the funds are ‘interest bearing’ (see introduction paragraph 9 above)

Credit balance on estate

10 Where there remains a credit balance on the estate after payment of all fees and charges, consideration must be given as to whether there are sufficient funds to return a deposit and/or make a payment on account of/in full of the petition costs. For further information on this procedure please refer to Case Help Manual part: Distributions.

11. (Amended September 2014) - Where a credit balance remains after a return of deposit and/or a payment on account of/in full of the petition costs has been made, use the Dividend Probability Calculator - Provincial or the Dividend Probability Calculator - London to assess whether there are sufficient funds to enable the LTADT to make a distribution to creditors. If the balance on the estate meets the criteria the case can be transferred. See Guidance for cases being sent to the LTADT and Protocol for transferring cases to the LTADT on the LTADT intranet page.

Bankruptcy only

12 Check that the HM Land Registry WO(B) number(s) have been entered on ISCIS (‘Data Store’ - 1). This confirms that Land Registry has received details of the insolvency.

13. (Amended September 2014) - Check for IPO/IPA on ISCIS (‘Assets’ tab and ‘Data Store’- 6) and if appropriate, prepare to transfer case to LTADT.

14 Check details of discharge date on ISCIS (’Case Header’ tab and ‘Compliance’ tab).

Company cases only

15 Check that CRO number(s) have been recorded on ISCIS (’Case Header’ tab).

16 Check that winding up order filed at Companies House and status shown is correct.

17 Check that D1 or D3 form details have been entered on ISCIS (‘Conduct Assessment’ tab).

All cases

18 Once a case is ready to be closed and release applied for, the ‘Release’ workflow on ISCIS should be initiated by selecting the ‘Release’ button on the ‘Case Header’ tab.  Then using the ‘Request Release’ screen details of the type of closing should be entered (e.g. Debit balance, Payments – But NO distribution to Prefs/Dividends).

Liquidations (For bankruptcies skip to paragraph 23)

(Amended March 2014)

19 The ‘Check Admin Receiver in place’ workflow task should be taken and completed as appropriate.  Where there is an administrative receiver, Law of Property Act receiver or an administrator of a pension scheme in office the question generated in the workflow should be answered in the affirmative.

20 Where an Admin Receiver’s involvement is identified as part of the completion of the above workflow task a new workflow task will be generated to ‘Create RELADR’.  The office should prepare form RELADR which will include:

  • full name of the company and court number;
  • that it is the official receiver's intention to apply for his/her release;
  • that it is the official receiver’s intention to apply to the Secretary of State for the dissolution of the company to be deferred for (usually) two years from the date that release is granted
  • that the relevant person has 28 days to reply
  • the authority of the official  receiver as to the destruction of books, papers or other records held

Once this action has been taken the workflow task should be taken and completed.

21 A workflow task will be generated to prompt for the completion of deferral of dissolution details for the company. Check details of deferral of dissolution, if appropriate, are entered on ISCIS (‘View Case Party’ - Dissolution ).

22 Where, unusually, a decision is made to defer the dissolution of a company after it has been released, form DSNDIR should be sent to the EAIPS.caseclosure inbox. EAIPS will then issue a deferral notice to Companies House. This must be done asap and within three months of the release date because at that point the company will be dissolved.        

All Cases

23 Take the ‘Perform Manual Checks’ workflow task.  Once manual checks have been carried out the task should be completed.

24 Complete the summary of the official receiver’s receipts and payments (form ACCSUM) which should show :

  • Estimate(s) of the amount (£) of assets to be realised and actual realisations
  • Details of any deposit
  • Costs of realising assets i.e. agents costs, advertising costs
  • Total net Realisations
  • Any payments made from the estate including fees for administration and/or return of deposit, law costs and dividend payments.
  • Total payments
  • Balance on the estate, which should agree with the balance on the  financial ledger

25 Take the ‘Create NORAD Documentation’ workflow task and follow the on screen prompts.  Send a copy of form NORAD to all known creditors as listed on ISCIS (‘Creditors’ tab) together with a summary of the official receiver’s receipts and payments (ACCSUM, ISCIS ‘Docs’ tab).

26 A copy of form NORAD will be automatically selected to print, addressed to the court and should be filed at court accordingly. In bankruptcy a copy of form ACCSUM must also be sent to the bankrupt under cover of form TRLTB.

27 Once all the workflow tasks have been completed by the official receiver a workflow task to check the case’s suitability for release will be sent to EAIPS (OR Release Team workflow group). 

28 There will be a 28 day delay to see if any objections to release are received.  Once those 28 days have elapsed and if no objections have been received the system will automatically grant the official receiver’s release.

29 If an objection to release is received by the official receiver it should be forwarded immediately to EAIPS.