PART 7
May 2014
FORFEITURE AND RESTRAINT ORDERS UNDER THE TERRORISM LEGISLATION
The legislation relating to forfeiture and restraint orders is encountered rarely and so has not been dealt with in depth. What follows in this Part is a brief synopsis of the legislation and its implications. If the official receiver has a complex query in relation to this area of law he/she should contact Technical Section for guidance.
9A.154 Terrorism Act 2000 - forfeiture order
Where a person is convicted of a terrorism offence under the Terrorism Act 2000, the court may order the forfeiture of any property that they have in their possession or under their control which might be used for the purposes of terrorism [note 1] [note 2] [note 3]. The court may appoint a receiver to take possession of and deal with the assets, make a restraining order prohibiting a person from dealing with the assets or make a charging order over the assets to secure payment to the Crown [note 4].
Before making a forfeiture order the court must give an opportunity to be heard to any person, other than the convicted person, who claims to be the owner or otherwise interested in anything which can be forfeited [note 5].
9A.155 Effect of insolvency on the forfeiture order
The money or property subject to a terrorism forfeiture order (see paragraph 9A.154) shall not be finally disposed of for a period of six months from the making of the forfeiture order [note 6]. If, during that time, qualifying insolvency proceedings [note 7] [note 8] are commenced, the insolvency practitioner (including the official receiver) [note 9] may claim that money or property to deal with within the insolvency proceedings [note 10]. Qualifying insolvency proceedings include a both voluntary and compulsory winding up of a company, a winding up of a partnership, a bankruptcy order and the administration of the insolvent estate of a deceased person [note 11].
9A.156 Action to take where terrorism forfeiture order is in force – serve notice on court
On becoming aware of a forfeiture order made within the previous six months, the official receiver should try to have the assets dealt with in the insolvency proceedings. To claim assets for the insolvency proceedings, the official receiver should serve written notice on the court in which the forfeiture order was made [note 12]. The notice should [note 13];
9A.157 Effect of service of notice on the court
Provided that the notice served by the official receiver (see paragraph 9A.155) complies with the above, the forfeiture order and any order made in connection with the forfeiture order (an ancillary order) will cease to have effect in relation to the assets covered by it, which will be dealt with in the insolvency proceedings [note 14].
The official receiver should ensure that any funds held by the court are passed to him/her or are retained by the court to the order of the liquidator or trustee. In addition the official receiver should obtain details of any assets not yet realised and of any receiver appointed in relation to the forfeiture order, so that such assets can be protected and recovered for the insolvent’s estate.
9A.158 Expenses of the forfeiture proceedings
Any allowable expenses of the forfeiture proceedings may be deducted from the proceeds of sale of the property, or part of the property may not be released to the official receiver so that such expenses are discharged [note 15]. If allowance was not made for the expenses when the property was delivered up or the value of the property is insufficient to cover such expenses, a claim may be made in the insolvency proceedings. This claim would be treated as if the expenses were expenses of the insolvency proceedings [note 16] [note 17].
9A.159 Secretary of State to be a postponed creditor in the proceedings
In the event of any distribution being made to creditors, the Secretary of State responsible for the forfeiture would be a postponed creditor (see paragraph 40.93) for the value of the property previously subject to the forfeiture order, the claim being payable only after the other debts have been paid in full with interest [note 18].
9A.160 Restraint orders in relation to terrorism offences
The High Court has the power, in relation to terrorism offences, to make a restraint order in relation to property where [note 19] [note 20]:
The application for a restraint order may be made without notice [note 21].
9A.161 Effect of a restraint order
A restraint order prohibits a specified person to whom notice of it is given, subject to any conditions and exceptions specified in the order, from dealing with specified property in respect of which a forfeiture order has or could be made [note 22].
In this context, ‘dealing with property’ includes removing the property from Great Britain [note 23].
9A.162 Official receiver to seek discharge of restraint order over insolvent’s property
The official receiver will not be able to deal with property subject to a restraint order (see paragraph 9A.160). It will be necessary for the official receiver to apply to the High Court for the order to be discharged [note 24]. The advice of Technical Section may be sought regarding the wording of such an application.
9A.163 Official receiver dealing with property subject to forfeiture or restraint
If, in the absence of a correctly worded notice to the court (see paragraph 9A.155) the official receiver reasonably deals with any property which is subject to a restraint or forfeiture order he/she shall not be liable for any loss caused by his/her action and he/she will have a lien on that property for his/her unpaid expenses and remuneration [note 25].
9A.164 Recission of winding-up order or annulment of bankruptcy order
If a bankruptcy order is annulled, any property which was previously forfeited (or its value) will again be the subject of the forfeiture order and the official receiver should inform the court in which the forfeiture order was made of the annulment so that any funds or assets subject to the forfeiture order are returned to the court or to the receiver [note 26]. There are no specific provisions relating to the return of property on the stay of a winding-up order. Where a winding-up order is stayed (or rescinded) the official receiver should inform the court that made the forfeiture order and the police of the stay and that control of the company’s property will revert to the company and its directors.