June 2000

1.50 Interim receiver [s286]

The official receiver may be appointed by the court as interim receiver at any time after the presentation of a bankruptcy petition. In such cases his/her basic function is to protect the debtor’s property pending the hearing of the petition.

 

1.51EA Acting as receiver and manager

Unless the court appoints an insolvency practitioner as trustee at the same time as making the bankruptcy order the official receiver becomes receiver and manager of the bankrupt’s estate. (See also Chapter 24 Receiver and Manager.). The function of the official receiver in this capacity is to protect the estate and, for that purpose: 

• he/she has the same powers as if he/she was a receiver or manager appointed by the High Court, and
• he/she is entitled to sell or otherwise dispose of any perishable goods in the bankrupt’s estate, or any goods whose value is likely to diminish if they are not disposed of.

The official receiver must take any necessary steps as he/she thinks fit for protecting any property which may be claimed for the estate by a trustee. He/she is not obliged to incur expenditure if this will create a debit balance in respect of the estate, except where the Secretary of State has directed that expenditure.

Notes: [s287] [s287(2)(a)] [s287(2)(b)] [s287(3)(b)]

If an insolvency practitioner is appointed trustee when the bankruptcy order is made, the official receiver retains various statutory duties, including the investigation of the bankrupt’s conduct and affairs and the duty to report to creditors.

The official receiver is not expected to act as trustee in cases with sufficient assets to make the appointment of an insolvency practitioner worthwhile. The official receiver may apply to the Secretary of State to appoint an insolvency practitioner as trustee when no appointment has been made by the creditors (see chapter 17 part 5).

 

1.52EA Acting as Trustee

The official receiver becomes trustee of the bankrupt’s estate when: 

1. he/she gives notice to the court of his/her decision not to call a meeting of creditors to appoint a trustee, or
2. at a first meeting of creditors no trustee is appointed, and the official receiver gives notice to the court that either he/she has decided not to apply for an appointment by the Secretary of State, or that an application having been made, the Secretary of State has declined to make an appointment, or
3. there is a vacancy in the office of trustee.

The bankrupt’s estate vests in the official receiver immediately on his/her becoming trustee, without any conveyance, assignment or transfer.

Notes: [s293(3)] [s295(4)] [s300(2)] [s306]

 

1.53 Function as Trustee

The powers and duties of the official receiver as trustee are mainly set out in Chapter IV of Part IX of, and Schedule 5 to, the Act. He/she should arrange for the sale of any assets and distribution of the proceeds to the creditors. The official receiver as trustee should take appropriate action to identify and recover the bankrupt’s assets.

While he/she is trustee, 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 is not comprised in the bankrupt’s estate, 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, though, 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: [s287(4)]

 

1.54 Duty of Care

The official receiver is under no strict duty to protect property which does not form part of the estate e.g. third party goods (see Chapter 31.0, part 2). A duty of care may arise where the official receiver could be considered a bailee of the property. (See also paragraph 31.6.53).

 

1.55 Liability of Official Receivers

As trustee, the official receiver is an office-holder, and an application may be made against him/her under section 303 or 304. Section 303 permits application to be made to the court by a bankrupt, his/her creditors or any other person who is dissatisfied by any act, omission or decision of a trustee of the bankrupt's estate. The courts are reluctant to interfere where a trustee has exercised his/her powers in good faith (Re Debtor (No.400 of 1940) [1949] Ch 236). The effect of a release as trustee is to discharge all liabilities in respect of acts or omissions in the administration of the estate. Any action subsequently brought under section 304 requires the permission of the court.

Notes: [s303, s304]

 

1.56 Fees

The fees payable to the official receiver acting as trustee are governed by Regulations 33, 34 and 35 of the Insolvency Regulations 1994.

The official receiver cannot use BIS funds for the benefit of an estate e.g. obtaining legal advice, except where this has been authorised by the Secretary of State, (in practice Technical Section), see also Chapter 36, Estate Accounting.

 

1.57 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)]

 

1.58 Release of Insolvency Practitioner as Trustee

When it appears to an insolvency practitioner trustee that the administration of the bankrupt’s estate is complete, he/she has a duty to summon a final meeting of creditors. The trustee must give 28 days’ notice of his intention to vacate office to the official receiver, together with notice of any creditors’ meeting. If there is no resolution against the trustee’s release, it has effect from the date that notice of the final meeting is filed at court. The official receiver then becomes trustee ex officio, i.e. by virtue of his office, (see paragraph 1.59 below and Chapter 48 Part 3).

Notes: [r6.137]

 

1.59 Duty as ex-officio Trustee

When the official receiver becomes trustee ex officio, he/she is from then on responsible for dealing with any post-release enquiries. Although normally by that stage any realisable assets would have already been dealt with, there may be assets which subsequently come to light or acquire a realisable value. 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 as trustee, (see chapter 17 part 5).

Notes: [s300(1)(2)

 

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