Second and Subsequent Bankruptcies

This part has been amended to include the bankruptcy provisions of the Enterprise Act 2002 which came into force on 1 April 2004 and of the Enterprise and Regulatory Reform Act 2013 which came into force on 1 October 2013.


1) Second or subsequent bankruptcies

Before the introduction of the EA2002 where a bankruptcy order was made against an individual who had previously been an undischarged bankrupt during the fifteen years prior to that bankruptcy order, he/she would not be entitled to an automatic discharge from the later bankruptcy unless the prior bankruptcy was annulled. To obtain a discharge from the second or subsequent bankruptcy, the bankrupt would have to apply to the court for an order of discharge and would not be able to make such an application until five years have elapsed from the date of the latest bankruptcy order.   

Under the EA2002, a previous bankruptcy has no direct bearing on an individual's right to automatic discharge. Thus, where a bankruptcy was made against an individual on or after 1 April 2004 from which he is discharged and a subsequent/second bankruptcy order is made against him, he will be automatically discharged one year from the date of the second/subsequent bankruptcy order.

The EA2002 also introduced a provision for a bankrupt to obtain an early discharge. A bankrupt may be discharged earlier if the official receiver follows the early discharge process or later if the court makes an order suspending the bankrupt's discharge following an application by the official receiver or trustee.

This early discharge provision was repealed by the Enterprise and Regulatory Reform Act 2013, which came into force on 1 October 2013. Bankruptcy orders made on or after 1 October 2013 are not eligible for early discharge.  For further information on these two procedures please refer to the Case Help Manual part "Discharge from Bankruptcy".

If the first bankruptcy order was made before 1 April 2004 the transitional provisions covered in paragraph iii will apply.


2) BROs and BRUs

The Enterprise Act 2002, whilst imposing a shorter term for bankruptcy, seeks to protect against the minority of bankrupts who abuse the system or whose conduct has been dishonest, reckless or otherwise culpable by introducing Bankruptcy Restrictions Orders (BROs) and Bankruptcy Restrictions Undertakings (BRUs).

A BRO or BRU operate so as to extend the period of restrictions to such individuals for a minimum period of 2 years up to a maximum of 15 years. The court will grant a BRO if it thinks it appropriate to do so having regard to the conduct of the bankrupt. An application for a BRO must be made by the official receiver before the end of the one-year discharge period, unless the court agrees otherwise.

Alternatively, the bankrupt may consent to be bound by a BRU. This is an agreement between the bankrupt and the official receiver that the bankrupt agrees to the extension of the restrictions until a specified date. It is a binding agreement and operates in the same way as the court order. The bankrupt may apply to court for a BRU to be annulled or for it to cease to have effect before the agreed specified date.

In the same way as an undischarged bankrupt, the subject of a BRO or BRU may not obtain credit of more than the prescribed amount, or engage in business without disclosing his status, nor may he act as the director of a limited company. Further, there are certain restrictions that will no longer apply to an undischarged bankrupt but only to the subject of a BRO. For example, an undischarged bankrupt was previously prevented from holding office in local government or from acting as a school governor but this is no longer the case and only those who are subject of a BRO or BRU will be precluded from such positions.

It should be remembered that a person subject to a BRO or BRU is still discharged from bankruptcy, the restrictions imposed on them being as a result of the order or undertaking.

A previous failure is not listed in the grounds for a BRO application but is a matter for consideration when making an application. The official receiver cannot make application for a BRO solely as a result of the bankrupt having a previous failure. Thus, there needs to have been evidence of unfit conduct in respect of the current bankruptcy, before an application is made. If, however, it can be shown that a bankrupt has failed to learn from previous mistakes, the court may take this into account when considering the BRO application and may make the order for a higher period.

In determining whether an application for a BRO is appropriate, the court will consider whether the bankrupt was an undischarged bankrupt at some time during the period of 6 years prior to the current bankruptcy order. Similarly, in determining whether to accept a bankruptcy restrictions undertaking (BRU) the official receiver should have regard to whether the individual was an undischarged bankrupt in the previous 6 years.

Applications for BROs can only be made (or BRUs can only be accepted) in cases where the unfit conduct occurs after 1 April 2004.


3) Transitional provisions

The EA2002 has introduced transitional provisions which may affect a bankrupt's discharge period for those who were already bankrupt before 1 April 2004. Where the bankruptcy order was made before 1 April 2004 and the individual is a second time bankrupt who had previously been an undischarged bankrupt in the 15 years prior to the current bankruptcy and remains undischarged from the second bankruptcy, he will be discharged either on 1 April 2009 (5 years from the legislation coming into force) or any earlier discharge date ordered by the court after 1 April 2004. The bankrupt may still apply for discharge to the court 5 years after the date of the bankruptcy order if this falls before 1 April 2009.


4)  How does the official receiver know if the bankrupt has been subject to proceedings before?

As part of the OR's initial procedure when a bankruptcy order is made, a search should be made of the Central Index using all of the name(s) of the individual included in the description. This is to check whether that person has been made bankrupt previously or is subject to an individual voluntary arrangement. Any findings should be reported to the B1/examiner.

The bankrupt is also required to state whether he/she has been made bankrupt before as part of the bankruptcy preliminary information questionnaire (PIQ), form B40.01  If so, the bankrupt should provide details of the court and OR's office which dealt with those proceedings.  The previous office file should always be examined, especially in relation to the cause of failure, in the earlier bankruptcy and the pattern of events preceding it. Often this will provide a guide to particular areas of conduct which may also feature in the subsequent failure.


5) Foreign bankruptcies

Any bankruptcy orders made in "foreign" countries, and that includes Scotland and Northern Ireland, do not count as earlier bankruptcies for the purposes of determining the bankrupt's discharge. A second or subsequent bankruptcy refers only to those orders made in England and Wales. Where the bankrupt is involved in a similar type of insolvency elsewhere the respective trustees will normally have no title to undistributed assets in the other jurisdiction and no right to prove in the other proceedings.


6) Claim of earlier trustee

When a bankruptcy order is made and the bankrupt has not been discharged from prior bankruptcy proceedings, the trustee in the earlier bankruptcy is entitled to prove in the later bankruptcy for:

  1. the unsatisfied balance of the provable debts in the earlier bankruptcy,
  2. interest payable on that balance, and
  3. any unpaid expenses in the earlier bankruptcy.

Where the bankrupt has been discharged from the earlier proceedings the trustee is not entitled to make such a claim. 

NB Any claim by the trustee in the earlier bankruptcy would rank for payment only after all other proved debts have been paid in full with interest in the later bankruptcy.

Where the OR becomes aware that a bankrupt is undischarged from previous bankruptcy dealings, he/she should inform the trustee (in the earlier proceedings) of the making of the bankruptcy order to ensure that any undistributed assets relating to any after-acquired property and/or monies paid under an IPO, are transferred to the later proceedings. The OR should also ensure that the claim of the trustee in the earlier bankruptcy is noted on the office file.


7) Transfer of property

When the trustee in bankruptcy receives notice of a subsequent bankruptcy petition against the same individual, he/she must hold and protect any after-acquired property claimed or monies paid under an IPO, until the petition is disposed of.

Where a subsequent bankruptcy order is made, any after-acquired property claimed by the trustee in the earlier bankruptcy would become transferable to the later bankruptcy. This would also apply to any monies received under an income payments order but not distributed.

Although after-acquired property or money paid under an IPO will form part of the estate in the later bankruptcy it will be subject to a charge in favour of the earlier trustee for any expenses incurred in dealing with those assets. When the OR is trustee in the earlier bankruptcy he/she must thus ensure that all appropriate fees and remuneration have been charged under the Insolvency Fees Order and the Insolvency Regulations and are deducted from the proceeds of any property before being transferred.

If a bankruptcy order is made as a result of a subsequent petition, any distribution made by the trustee (as a result of any after-acquired property or monies from an IPO) after he/she had received notice of the petition, is void, unless made with the consent of the court in which the earlier proceedings were brought.


8)  Payments regarding conditional discharge from prior bankruptcy

On occasion, the second time bankrupt may have been conditionally discharged from a previous bankruptcy, which means that the discharge was given subject to certain conditions regarding income or property being met.

If those discharge conditions have not been satisfied at the time of the later bankruptcy, the trustee in the earlier case is entitled to retain any payments made in accordance with these conditions including amounts yet to be distributed, unless the order of discharge is subsequently rescinded.

Where the bankrupt's failure to comply with the conditions on which the order of discharge was made results in the discharge being rescinded on the application of the first trustee, or where the second/subsequent bankruptcy order prevents the bankrupt from complying with those conditions, any funds held will be transferred to the later bankruptcy and the first trustee will submit a claim in the later proceedings.


9) Creditors and proof of debts

Individual creditors in the earlier bankruptcy do not become creditors individually in the subsequent bankruptcy for any debt relating to the earlier proceedings. Where the bankrupt is not discharged from the earlier proceedings, the original trustee should prove in the later bankruptcy for the unsatisfied balance of the total provable debts in the earlier bankruptcy.

The trustee may also prove for interest payable on that balance and any unpaid expenses, such as petition costs, using a special form of proof of debt, form 6.38. As with any other proof, the amount claimed may be varied at a later stage if circumstances were to change, for instance, where assets realised and distributed may reduce the outstanding balance.


10) Claims in the earlier bankruptcy

If the OR as trustee in an earlier bankruptcy needs to submit a claim in the later proceedings, he/she should establish all claims in so far as possible before lodging a proof of debt. The official receiver does not need to obtain formal proofs of debt for this purpose, a notice to creditors outlining the circumstances and requesting early indication of their claims would suffice.

However, in undertaking this work, the OR should bear in mind that a distribution will only be made in respect of the debts, etc of an earlier bankruptcy, after all of the proved debts in the later bankruptcy have been paid in full with interest. The likelihood of such a distribution being made is thus remote and the official receiver should rely on existing information wherever possible for this purpose.

In spite of this proviso, should a further provable debt come to light after the earlier trustee has proved for the unsatisfied balance, the trustee in the earlier bankruptcy should notify the later trustee and amend his/her proof of debt accordingly.


11) Distribution of funds received from first trustee

Funds received by way of dividend from the later proceedings must be distributed to all proved creditors in the earlier bankruptcy, whether or not their claims were included in the proof lodged by the original trustee. If the funds have already been distributed when a late claim is received, the usual rule applies and the distribution will not be disturbed. The additional claim will only be paid if and when further funds are received.


12) Proposal for a voluntary arrangement

Where a proposal for an IVA is made in the later bankruptcy, and the official receiver is trustee in either or both bankruptcies, he/she should ensure that the rights of the creditors in the earlier bankruptcy are dealt with specifically together with the disposal of any undistributed after-acquired property or income in the hands of the second trustee or supervisor.

Where the OR is trustee in the earlier bankruptcy, he/she should attempt to make it a condition of his/her agreement to vote for the proposal that either the undistributed after-acquired property remains in the earlier bankruptcy or that the creditors in the earlier bankruptcy are paid the same proportion of their claims as those in the later bankruptcy. It is only fair that the proposal should contain some provision to achieve something for the creditors in the earlier bankruptcy.



  1. All of these provisions also apply where an insolvency administration order is made under the Administration of Insolvent Estates of Deceased Persons Order1986.
  2. If the earlier bankruptcy involved a partnership, the proof for the unsatisfied balance will comprise the balances due both in the separate estate of the partner and the joint estate of the partnership. However, any dividend received on the proof must be applied to the liabilities of the separate estate first and only if there is a surplus once that balance has been paid in full, can it be transferred to the joint estate.

Where can I find out more?

Enterprise Act 2002 Sections 256 -259.

Enterprise Act 2002 Schedule 19

Insolvency Act 1986 Section 278-281

Insolvency Act 1986 Schedule 4A

Insolvency Rules 1986 Rules 6.217 - 6.220

Technical Manual


21 Second or subsequent bankruptcies 

22 Discharge form bankruptcy

Case Help Manual


After-acquired property 

Discharge from bankruptcy 


Management Notice: M14/00 - Destruction of Official Receivers' files


Second and Subsequent Bankruptcies Flowchart  



1. Check with Central Index against the name(s) included in the bankruptcy description, together with any aliases.

2. Refer any findings to the examiner for his/her attention.

3. Where it becomes evident that the bankrupt has been subject to a previous bankruptcy order:

  1. if the original bankruptcy order was dealt with your office, obtain the office file and give this to the current examiner;
  2. where the original bankruptcy order was dealt with by another office refer this to the examiner for further instruction.

N.B. The Insolvency Service currently has a robust file destruction policy, which is set out in Management Notice M14/00, depending on the age of the case (i.e. over 8 years old) there is a strong possibility that the office file no longer exists, although the court file may still be available.

4. The bankrupt's discharge will be dependant on when the bankruptcy order was made.

Transitional Provisions for all bankruptcy orders made before 1 April 2004

5. If bankrupt for a second or subsequent time before 1 April 2004 and the individual was discharged more than 15 years prior to the current bankruptcy order, the bankrupt will be discharged on 1 April 2005 or if earlier the date they would normally be discharged.

6. If a bankrupt was undischarged from a previous bankruptcy within 15 years of the current bankruptcy order his/her discharge will be on 1 April 2009 or he/she may apply to the court for discharge on the 5th anniversary of the bankruptcy order. The procedure for dealing with a bankrupt's application to court for discharge is covered in the Case Help Manual part "Discharge from Bankruptcy".

Bankruptcy orders made after 1 April 2004

7. For second or subsequent bankruptcy orders made after 1 April 2004, the bankrupt will be discharged 1 year from the date of the the latest bankruptcy order or earlier if the OR applies to court for the bankrupt's early discharge. The only exception to this would be if the bankrupt's discharge was suspended by order of the court.

Other matters

8. Any claims of the earlier trustee should be referred to the examiner for instructions. Similarly, any claims made by the OR as trustee in an earlier bankruptcy should only be dealt with providing the examiner has given clear and detailed instructions. Do not deal with any matters relating to the transfer of property/undistributed funds without the approval of your B1.