1.39 Acting as provisional liquidator [s135]
The official receiver may be appointed as provisional liquidator at any time following the presentation of a winding-up petition. The basic function of the official receiver in such circumstances is to protect property and take control of the company’s affairs pending the hearing of the winding-up petition. The official receiver is entitled to be paid for his/her services as provisional liquidator at an hourly rate.
See Chapter 2 for further details regarding provisional liquidations.
The court has power to appoint the official receiver as receiver on behalf of debenture holders, but this power is rarely exercised. The official receiver should contact Technical Section if such an order is made.
Notes: [s32]
1.41 Acting as liquidator [s136(2)]
When a winding-up order is made the official receiver becomes liquidator unless and until an insolvency practitioner is appointed in his/her place. The exception to this is where the court has appointed a former administrator, or supervisor under a voluntary arrangement, as liquidator at the time of the winding up. The official receiver retains his/her duty to:
The official receiver’s initial duties as liquidator include identifying, collecting, securing and protecting the assets of the company, until a meeting of creditors is held or a decision is taken not to hold a meeting (see also Chapter 8).
The official receiver is not expected to act as liquidator in estates with sufficient assets to make the appointment of an insolvency practitioner worthwhile. If no appointment is made at a creditors/contributories’ meeting, the official receiver may apply to the Secretary of State to appoint an insolvency practitioner, (see Chapter 17, Part 5).
Notes: [s140(3)]
As a liquidator of a company, the official receiver's general functions are to secure the assets, realise them and distribute the proceeds to the company's creditors, and, if there is a surplus, to the persons entitled to it (normally the contributories). If the official receiver expects to be replaced as liquidator, he/she should as far as practicable limit his/her activities to asset protection.
While he/she is liquidator, the official receiver is liable for his/her actions on the same basis as an insolvency practitioner. For instance, if he/she wrongfully interferes with property which does not belong to the company, by seizing or disposing of it, the lawful owner may sue him/her to establish a right to return of the property or to the proceeds of sale. Provided that the official receiver acted in good faith, he/she will not be liable for any loss or damage arising from the wrongful interference. He/she also has a lien, or charge, over the property for his/her costs in the exercise.
Notes: [s143(1)] [s234(3)(4)]
There is no strict duty on the official receiver to protect property which does not form part of the estate (see Chapter 31.0, part 2). A duty of care may arise in respect of such property if the official receiver could be considered a bailee of the property, (see paragraph 31.6.53).
1.44 Liability as liquidator [s212]
When performing the duties of liquidator, the official receiver is an office holder, the same as any insolvency practitioner, and consequently he/she is personally liable for his actions. Consequently, section 212 will apply to the official receiver while acting as liquidator, and an application may be made against him/her under that section.
Any creditor or contributory may apply to the court with regard to any of the powers used by a liquidator. The court is reluctant to interfere in the liquidator’s exercise of the powers conferred on him/her, and will only do so if a decision was taken in bad faith or was so perverse that no liquidator properly advised could have taken it (Hamilton v Official Receiver [1998] BPIR 602).
The effect of the release of a liquidator is to discharge all liabilities in respect of acts or omissions in the administration of the estate. Any action subsequently brought under section 212 requires the permission of the court.
Notes: [s167(2)] [s168(5)]
The fees payable to the official receiver for acting as liquidator are governed by Regulations 33, 35 and 36 of the Insolvency Regulations 1994. The official receiver cannot use BIS funds for administering cases, e.g. obtaining legal advice, except by direction of the Secretary of State (in practice, Technical Section). See also Chapter 36 Estate Accounting.
1.46 Death of an Official Receiver
If an official receiver dies in post, or otherwise ceases to hold office, or is succeeded, any property vested in him/her, as office-holder, shall vest in his/her successor without any conveyance, assignment or transfer.
Notes: [s400(3)]
1.47 Release of an IP as liquidator
When a liquidator has completed the administration of a case and obtained his/her formal release, the Secretary of State will send the certificate of release to the official receiver to file at court. From then on the official receiver is responsible for dealing with any post-release enquiries and any assets which may later come to light or acquire a realisable value. (See 1.48 below and Chapter 48, Part 2).
Notes: [r4.125]
1.48 Vacancy in office (OR as liquidator (Ex Officio))
When a practitioner vacates office as liquidator in a court winding up, the official receiver becomes liquidator ex officio, i.e. by virtue of his/her office. (See Chapter 48, Part 2). Normally at that stage the realisable assets will have been dealt with. Any assets becoming available or coming to light after the dissolution of a company, are "bona vacantia" and effectively pass to the Crown. If necessary, a company can be restored to the register so that assets can be claimed for the benefit of creditors (see Chapter 38, part 9). Where there are realisable assets to deal with, involving distributions to creditors, the official receiver should consider applying to the Secretary of State for the appointment of an insolvency practitioner, but only after restoration. See Chapter 17, part 5.
Notes: [s136(3)] [s1029 CA2006] [s137]
The law on the winding up of insolvent partnerships is contained in the Insolvent Partnerships Order 1994 (IPO) which adapts the provisions of the Insolvency Act 1986 to suit the special circumstances of partnership cases. Generally, a partnership is wound up as an unregistered company as set out in Part V of the Act.
There is an important difference where a winding-up order is made against an insolvent partnership, (as an unregistered company), and concurrent petitions are presented against one or more of the insolvent partners. On the making of a bankruptcy order against an individual partner, the official receiver is appointed trustee in bankruptcy of his/her estate, and not receiver and manager. The court may order the consolidation of partners’ individual insolvency proceedings under section 303(2B), and/or make an order or give directions under section 303(2C) on the administration of the individual and partnership estates.
Notes: [The Insolvent Partnerships Order 1994, Modifying Schedule 4 to the Act] [s303]
There is another way of dealing with partnership property where individual partners have been bankrupted and no petition has been presented against the partnership. The Court may make a section 303(2A) order enabling the official receiver, as trustee, to exercise the powers conferred by Schedule 4 to the IPO over the partnership assets. The official receiver (or an insolvency practitioner appointed instead of him/her, see chapter 17), would effectively have access to the partnership assets without a petition being presented against the partnership.
The details set out in Parts 2 and 4 of this chapter relate equally to the administration of partnerships as unregistered companies. For further details regarding partnerships generally see Chapter 53.
[Back to Part 4 - Role in Investigation, Disqualification & Prosecution] [Onto Part 6 - Duty & functions as Receiver & Manager & Trustee]