April 2009
PART 3
DISCRETIONARY PUBLICATION OF INSOLVENCY INFORMATION
NOTE: THIS PART IS ONLY APPLICABLE IN RELATION TO CASES WHERE THE PETITION WAS PRESENTED ON OR AFTER 6 APRIL 2009
5.39 Discretionary publication of insolvency information - general (amended May 2010)
It generally follows in the Rules that where publication of an insolvency event in the Gazette is required, the person responsible for the publication may also advertise the matter in such other manner as he/she thinks fit. This is known as “discretionary advertising”. There are exceptions to this general principle, and these are outlined in paragraphs 5.29, 5.30, 5.32 and 5.33.
This Part of the chapter contains information and guidance to assist official receivers decide when to exercise the discretion to advertise. This Part also contains information on those matters where publication in the Gazette is discretionary (see paragraphs 5.45 and 5.46).
The Insolvency (Amendment) Rules 2010 introduced prescribed contents for all gazette notices and advertisements and details are given in paragraphs 5.12A and 5.12B. All the templates for the publication of gazettes notices and advertisements have been revised to include the required contents and these are to be used for all cases from 6 April 2010. For details of the form templates please refer to the Case Help Manual Part – Publication of Insolvency Information.
5.40 Exercising the discretion to advertise
Generally speaking, there are very few occasions where it will be appropriate to exercise the discretion to advertise, and a decision to place an advertisement should be the exception.
When deciding whether to advertise, an insolvency event the question that should be asked is “why advertise?”, rather than “why not advertise?” and the expense of placing any form of advertisement should be weighed against the likely benefit to be achieved from it.
5.41 Circumstances in which it may be appropriate to exercise discretion to advertise
There are two main areas where it may, in exceptional circumstances, be appropriate to exercise the discretion to advertise:
5.42 Advertising where there has not been a full disclosure
The most likely reason for exercising the discretion to advertise would be where there is an actual, or suspected, failure on the part of the director or bankrupt to provide a full disclosure of the relevant financial affairs. Typically, this will occur in non-surrender, non-trace or non co-operation cases, and advertisement of the order may result in creditors, debtors or others with information about the affairs and assets of the insolvent making contact with the official receiver. Advertisement of the order may also result in an absent director or bankrupt becoming aware of the proceedings and making contact with the official receiver.
That said, the fact that a director or a bankrupt is non-surrender or non-cooperation is not, in itself, reason to advertise. The decision must be based on an expectation that the advertisement will result in some positive benefit to the official receiver’s administration of the affairs. Where the official receiver believes that he/she has a good knowledge of the affairs of the insolvent and further information is unlikely to be forthcoming it may not be appropriate to advertise. Other means of obtaining information regarding the insolvent’s affairs should first be considered (see paragraph 5.43).
5.43 Use of other means to obtain information
The official receiver should consider all other means to obtain information regarding the insolvent’s affairs, such as the employment of tracing agents (see paragraph 8.38), or enquiries of the third parties (see paragraphs 3.30 and 4.30) prior to making the decision to advertise as these means may be more cost effective than advertisement
5.44 Advertising where there has been a high level of complaint or public concern
It is not unusual for an insolvent business to have dissatisfied customers and suppliers. Occasionally, these persons may be able to provide the official receiver with useful information relating to assets, liabilities or (mis)conduct. Where the official receiver considers that the level of complaint or concern justifies it, he/she might consider advertising notice of the order – either to elicit more contact from interested parties or to clarify, in the mind of the public, the status of the insolvency.
There should not, though, be an advertisement unless there is likely to be a real benefit to the official receiver’s administration of the affairs of the insolvent.
5.45 Gazetting and advertisement following an amendment of the title of proceedings
Where the court has made an order amending the title of proceedings (see paragraphs 4.19 and 4.20), the official receiver may publish notice of the order amending the title of proceedings in the Gazette and in any other manner he/she thinks fit (though the matter cannot be advertised without also being Gazetted) [note 1] [note 2].
The matters outlined in paragraph 5.40 should be taken into account when considering whether to publish the matter in the Gazette and advertise. Particular consideration needs to be given by the official receiver in respect of an amendment of a title of proceedings as to whether publication of the notice will result in the recognition of the bankrupt, where the original description would not have for example, a bankrupt using different name or trading style. 5.45A – Gazetting and advertisement following an order under the ‘persons at risk of violence’ provisions (May 2010) This applies to cases where a bankruptcy petition was presented on or after 6 April 2010 Where the disclosure or continuing disclosure to other persons of the bankrupt’s current address or whereabouts might lead to violence against the bankrupt or a family member who resides with him/her, the court may, on the application of the bankrupt, the official receiver, the trustee or the Secretary of State, order that the bankrupt’s current address be omitted from any notice to be gazetted or otherwise advertised. [note 2A] The court may further order that any other details of the bankrupt such as a previous address where he/she has resided or carried on business, be included in the title of the proceedings, the description on the bankruptcy order and the contents of any gazette notice or advertisement [note 2B] If an order is made by the court to amend the full title of the proceedings by removing the current address details, the official receiver has discretion to gazette (and advertise) the order if he/she thinks that it is appropriate in all the circumstances (likely to be rare). Any such notice should contain the standard contents, with the exception of the bankrupt’s current address. The amended title of the proceedings and the date of the bankruptcy order should be included but the notice must not include the description under which the proceedings were previously published. [note 2C]. For further information and a gazette template form see Case Help Manual part Amend Description See Chapter 4, paragraph 4.18A for further information on persons at risk of violence.
5.46 Publication of a notice of a public examination
There is no requirement to publish notice of a public examination in the Gazette or advertise in any other manner, unless the official receiver thinks fit (though there cannot be an advertisement without also a publication in the Gazette).
The matters outlined in paragraph 5.40 should be taken into account when considering whether to publish the matter in the Gazette and advertise. Of particular consideration in respect of public examinations is whether publication of the notice will bring the public examination specifically, and the bankruptcy generally, to the attention of the examinee. Further, publication of the notice of the public examination may result in the identification of additional creditors and/or useful information being disclosed by interested parties. When required, the notice of the order for a public examination must be published no later than 14 days before the date fixed for the hearing [note 3] [note 4]. In liquidations, where the winding up petition was presented (or there was a resolution for voluntary winding up or certain administration proceedings) prior to 6 April 2010, a notice of public examination must not be published before at least 7 days have elapsed since the examinee was served with notice of the order, unless the court otherwise directs. For liquidations where the petition was presented on or after 6 April 2010 (unless there was an earlier resolution for voluntary winding up or certain administration proceedings) and where the public examination order relates to a person who is or has been concerned in the promotion, formation or management of the company but was not an officer of the company and has not acted as liquidator, administrator or receiver and manager of the company (i.e. a person who falls under section 133(1)(c)), a notice of a public examination cannot be published until at least 5 business days have elapsed since the examinee was served with the order, unless the court otherwise directs. [note 5].
5.47 Timing of advertisement (amended May 2009)
If the official receiver decides not to exercise discretion to advertise at the initial stages of the case (when the Gazette notice is published), he/she might still advertise later in the case if the circumstances make it clear that this would be useful and the advertisement is being placed for the purpose for which it is intended in the Rules (that is, to publicise the making of the order) (though, see paragraph 5.40). There is no time limit on when to exercise the discretion so in, for example, cases of non-surrender or non co-operation the official receiver might decide to place an advertisement of the making of the insolvency order several weeks into the proceedings if this could be expected to reveal significant asset, liability or conduct information – or, where the advertisement might have the effect of bringing the proceedings to the attention of the absent director or bankrupt (see paragraph 5.42).
Advertisement after the initial stages of the case may also be appropriate where it becomes apparent that there is a high level of public interest – perhaps where the official receiver is receiving calls from individual customers or (ex)employees of the company who are unsure as to the status of the insolvent (see paragraph 5.44).
Where the decision to advertise an insolvency event is taken after the Gazette notice relating to that event has already been published, there is no need to re-publish the Gazette notice.
5.48 Advertisement decision normally made at completion of CAR(B) (amended May 2009)
In the normal course of events, it would be expected that the decision to advertise notice of the making of an order would be made no later than the time that the CAR(B) is completed (see Chapter 15, Part 4).
5.49 Record of decision to advertise
Where there is a decision to advertise any insolvency event a record should be added to the screen 8 explaining why the decision to advertise was taken (for example, what benefit was expected to be gained from the advert) and why the particular method of advertisement was chosen. This decision may also be recorded on the CAR(B). There is no need to record the reasons for a decision not to advertise.
Prior to the Rules changes in April 2009 the vast majority of advertisements were placed in a newspaper covering the locality where the insolvent traded and/or resided and, in general terms, there is no reason why this would not continue be the case . That said, one of the key changes arising from the Rules changes in April 2009 is to provide that where discretion is exercised to advertise a matter, it need not be advertised solely (or, at all) in a newspaper (local or otherwise). Depending on the circumstances, and the target audience, it may be appropriate to use some other form of advertisement (see paragraphs 5.52 and 5.53)
5.51 Advertising in a newspaper
As outlined in paragraph 5.50 it is not necessarily the case that an advertisement should be placed in a newspaper. That said, it has generally been the case that the vast majority of advertisements of insolvency information have been placed in a newspaper covering the locality where the insolvent traded and/or resided and it is likely that this will remain to be the most appropriate place for any advertisement in the vast majority of cases.
Where circumstances dictate it, there might be a case for placing the advertisement in a newspaper covering a larger area – possibly, a national newspaper. This might be appropriate where, for example, the insolvent operated a business covering a large geographical area and has a dispersed group of individuals as creditors. Should this set of circumstances arise, it is highly likely to be more cost effective to advertise via the Internet or other means (see paragraph 5.53).
See paragraph 5.17 for information on how to place a newspaper advertisement.
5.52 Advertising in a specialist publication
Where the insolvent operated in a narrow or specialised field of trade or business it might be appropriate to place the advertisement in a specialist publication relating to that trade or business – perhaps, a trade magazine. The benefit of this (rather than a newspaper) is that the advertisement may be better directed. A disadvantage, though, is that the frequency of publication of specialist magazines is likely to be less than a newspaper and, therefore, it could be some weeks or months before the advertisement appears. Also, the official receiver would need to be satisfied that the publication did, in fact, cover the sector in which the insolvent operated.
It is envisaged that the most common alternative to newspaper advertising will be to advertise on the Internet - particularly on the Insolvency Service website.
See paragraph 8.74 for information on the notice to be placed on any website operated by the insolvent.
5.54 Involvement of news media
Where an insolvent business has a high profile (such as a well known high street retailer) it is likely that the making of the order and events leading to the making of the order will have been covered in some depth by the news media. Assuming the matter has been correctly reported then it is unlikely to be worthwhile to advertise notice of the making of the order.
5.55 Advertising and the EC Regulation on Insolvency Proceedings
There is no requirement in the EC Regulation on Insolvency Proceedings (see Chapter 41) for advertisement of the opening of proceedings in member states other than the state in which the proceedings are opened (assuming publication and/or advertisement is required by the law of that state). There is provision, however, for the advertisement of the proceedings in another state should the office-holder request it. The publication would then have to be in line with the publication procedures provided for in that state [note 6].
Any member state in which the debtor has an establishment may require mandatory publication and, in this event, the liquidator is required to take all necessary measures to ensure such publication [note 7].
The costs of publication are regarded as an expense in the proceedings [note 8].
[Back to Part 2 – Publication of insolvency information – practicalities]