Part 2 - Bankruptcy – ‘Stay of advertisement’ and stay of proceedings
(Amended February 2010)
The court has the power to stay all or part of the insolvency proceedings [Note 1]. Where the official receiver receives notice of an intended application to court for a ‘stay of advertisement’ of the bankruptcy order, he/she may seek to limit the order to focus on suspension of the official receiver’s statutory duties under rule 6.34(2) or rule 6.46(2) (action following the making of the order) and rule 6A.4 (entry of information onto the individual insolvency register). The effect of an order suspending action by the official receiver under these limited terms is not a ‘stay of advert’ generally (which would have the effect of preventing the official receiver from issuing any form of notification of the order, including letters to third parties [Note 1a]), rather specifically that the bankruptcy order is not advertised in the London Gazette (gazetted), or advertised in such (local) paper as the official receiver sees fit, and notice of the bankruptcy order is not given to the Land Registry, nor is the bankruptcy order registered in the Individual Insolvency Register (IIR).
6.26 Court directions where assets at risk
Where the court grants a general ‘stay of advert’, requiring the official receiver to do nothing further to ‘publicise’ the order (e.g. write to a third party), this may prevent him/her carrying out his/her duties to secure and protect assets. In these circumstances if the official receiver is concerned assets are at risk or the essential administration of the case will be compromised, he/she may seek directions or request permission from the court to carry out specific enquiries. Such enquiries may include contacting third parties in relation to safeguarding assets or ascertaining liabilities. [Note 2].
6.27 Link to impending application, suspension to be time restricted
The official receiver should seek to ensure that any suspension of advertisement should not be ‘free standing’ but should be associated with another (impending) application such as an application to annul the bankruptcy order. The official receiver should also ensure the order includes reference to a specific period (which may be until a specified date or event) during which the order to suspend action to advertise the bankruptcy will be in force.
6.28 ‘Stay of advertisement’ in the High Court
(Amended February 2012)
Where an order is made in the High Court for a suspension of action by the official receiver as outlined at paragraph 6.25, the Petitions and Transfers Team (P&T) will give notice by email to a member of the official receiver’s staff who should ensure that the insolvency details do not appear in any subsequent newspaper or issue of the ‘London Gazette’ unless the deadline for cancelling the advertisement has already passed (see paragraph 6.46 for details of the procedure for withholding issue of the London Gazette notice). The order will be sent to the official receiver by DX but the official receiver should act immediately on receipt of the email. The order will only be faxed if the official receiver requires sight of the order urgently.
Official receivers must have adequate procedures in place to ensure that they react correctly to notification of suspension of the official receiver’s statutory duty to advertise (particularly where this occurs as part of a stay of proceedings) to ensure that Gazette notices, advertisements and notifications to the Land Charges Department are not issued in contravention of that order and that registration of the bankruptcy order in the IIR is suspended.
Representation of regional official receivers at High Court hearings to suspend his/her duty to advertise a bankruptcy order is dealt with via a monthly rota system shared between London A, B and PIU.
An Assistant Official Receiver of London A or B will be able to advise who will be attending that month.
Pending the hearing of an application by the bankrupt to appeal the bankruptcy order or for the order to be annulled, the official receiver should only do the minimum necessary to carry out his/her statutory duties. What the minimum necessary will be will vary from case to case, depending on the circumstances (see Part 1 paragraph 6.14). In practice, an order suspending the official receiver’s statutory duty to advertise will prevent the official receiver from summoning a meeting of creditors whilst the order remains in force (as details of the meeting cannot be advertised). In cases when a stay lapses or is lifted, and the deadlines relating to making a decision to hold a meeting (within 12 weeks of the bankruptcy order) or to fixing a meeting (not more than 4 months from the bankruptcy order) [Note 3][Note 4] cannot be met, application to the court for an extension of time to perform that act must be made, in addition to performing the act or acts which were prevented by the suspension of action to advertise the bankruptcy [Note 5]. The official receiver should use his/her right to examine the court file and make a note or take a copy of any useful information, e.g. in witness statements. Documents should not be removed from the court file when being copied.
Where the court orders a suspension of action by the official receiver to advertise the bankruptcy order, the bankrupt remains under the statutory obligations imposed by the Act and Rules. Following the decision in re Wigzell, ex parte Hart  2 KB 835, when granting a ‘stay of advertisement’ the High Court practice is to require and incorporate in the order an undertaking by the bankrupt forthwith to:
It is considered that the inclusion of these undertakings in the order suspending action by the official receiver to advertise the bankruptcy order will draw the bankrupt’s attention to his/her continued obligations under the Act and Rules. Official receivers attached to county courts should seek the same undertakings in their orders.
The official receiver should not accede to any request to voluntarily refrain from advertising a bankruptcy order or from taking any other steps in the bankruptcy proceedings because the bankrupt states that he/she intends to apply for an order suspending action by the official receiver to advertise the bankruptcy [Note 11] [Note 12] or for the annulment of the order or intends to appeal against the making of the order. In the absence of a court order or the service on him/her of formal application to the court for such an order [Note 13] [Note 14], matters should proceed as normal (see paragraph 6.44). There is rarely any merit in ‘unofficially’ restraining from taking proper action as this will often only lead to the bankrupt thinking that he/she has dealt with matters or taking more time than is actually necessary to deal with matters (which obviously has an effect on third parties). However, the official receiver should be careful not to be seen to be acting in a way which could attract criticism.
With the introduction of new provisions for persons at risk of violence from 6 April 2010 (see paragraph 6.32A) this paragraph is only likely to apply to pre 6 April 2010 petition cases
Where, on the application of the bankrupt, the court has, on the making of the bankruptcy order, granted a general ‘stay of advert’ requiring the official receiver to do nothing further to ‘publicise’ the order, the official receiver needs to ascertain whether the disclosure of a bankrupt’s address could lead to their being placed at risk of physical harm (e.g. individuals who have been the subject of domestic violence).
If this is the case, the official receiver may wish to seek directions from the court and suggest that an order be made withholding the address details from the bankruptcy description, or a combination of withholding the address details from the order coupled with a direction not to advertise the bankruptcy in a local newspaper, which would then enable the general ‘stay of advertisement’ to be lifted. The necessary enquiries can then be made to confirm that there is a genuine reason for withholding the address, with the official receiver retaining the option to report to court at a later date if these enquiries subsequently indicate that the description needs further amendment [Note 15]. The official receiver would still be able to place an insertion into the London Gazette without the bankrupt’s address. In cases where the name is so common (e.g. John Smith), as to make one individual indistinguishable from another without the address being included, it may be necessary to include some additional information with the bankrupt’s name (e.g. occupation or date of birth).
Post 6 April 2010 petition cases
The Insolvency (Amendment) Rules 2010 introduced significant changes with regards to publication of bankruptcy details for those persons who are considered to be at risk of violence. Where the disclosure or continuing disclosure to other persons (whether to the public generally or to specific 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 withheld from specified documents and public sources of information [Note 15a]. The bankrupt’s ‘current address’ means the address of the bankrupt’s current place of residence and any address at which he/she carries on business.
Where such an application to court is made, the application must be accompanied by a witness statement referring to rule 6.235B, and contain sufficient evidence to satisfy the court that the bankrupt or his/her family member would be at risk of violence or harm should his/her current address be disclosed.
If the application is successful, the court may order that:
Where the court makes an order on grounds b to f (above), it may further order that 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, the contents of any gazette notice or advertisement or any details kept on or to be entered onto the individual insolvency register.
The official receiver must ensure that immediate action is taken to comply with the terms of any court order made e.g. amending ISCIS to show ‘address withheld’ (when adding the bankrupt to the system as a party or updating party details) as this links to the Individual Insolvency Register (see paragraph 4.22).
If an order is made by the court to amend the full title of the proceedings, the official receiver must immediately send notice of it to the Chief Land Registrar who will amend the corresponding register.
The above provisions also apply where a person is subject to a bankruptcy restrictions order or bankruptcy restrictions undertaking. There are also similar provisions for debtors who have entered an IVA [rule 5.67] or are subject to a debt relief order or debt relief restrictions order/undertaking [rule 5A.18]
See also chapter 4, paragraph 4.18A.
For cases where the advertisement of the bankruptcy order may cause personal, but non-physical inconvenience, (which may be deemed an unavoidable consequence of bankruptcy), the embarrassment or inconvenience to a bankrupt of his/her address being disclosed, is not something which ought to prevent appropriate publicity of a bankruptcy order being made. It is not acceptable for the official receiver to be unable to issue to any third party information about the bankruptcy. If the bankrupt’s concerns persist regarding the disclosure of his/her address (e.g. for reasons of job or tenancy protection), the official receiver might consider seeking directions from the court but the full description (including address) should still be advertised in the London Gazette.
6.34 Stay of proceedings - application for individual voluntary arrangement
Where an application for an interim order is pending or such an order has been made (where the bankrupt intends to make a proposal for an individual voluntary arrangement (IVA)), the court may stay the bankruptcy proceedings in whole or in part [Note 16] [Note 16a] (see chapter 20.22 – 20.41). The effect of the stay of proceedings is to preclude the official receiver from taking any further steps in the bankruptcy. The court should be asked to state in its order what effect the particular stay has on the official receiver’s statutory duties. In such cases the official receiver must ensure, through sight of the relevant order, that he/she is aware of the extent to which he/she can continue to act while the interim order is in force and should ensure that he/she meets the terms of that order (without fail) [Note 17]. The official receiver should always request that the stay be for a specified period of time.
As a result of amendments made by the Insolvency Act 2000 a debtor may apply for an IVA without also making application for an interim order. [Note 18] For further details of the IVA procedure without an interim order see paragraph 57.13. For more information on the official receiver's role in voluntary arrangements see Chapter 20.
Section 261(4) gives the court the power to make such directions about the conduct of the bankruptcy and the administration of the bankrupt's estate as it considers appropriate for facilitating the implementation of an approved voluntary arrangement. This includes the power to stay the bankruptcy proceedings for whatever period it considers will be required to facilitate the implementation of the voluntary arrangement. Where the court stays the proceedings altogether under section 261 (giving directions relating to the conduct of the bankruptcy following an IVA) or under its inherent jurisdiction, the official receiver should request that the court state in its order what effect the order has on the statutory duties of the official receiver and on the status of the bankrupt. The official receiver should also always request that the stay be for a specified period of time and should ensure that he/she meets the terms of that order (without fail).
Application may also be made to stay the proceedings (generally) where an annulment application is made (see paragraph 6A.6) [Note 19]. In these circumstances the official receiver and any trustee will receive notice of the application and should attend the hearing of the application and normally make representations to the court objecting to a stay of the whole proceedings on the grounds that difficulties in the administration may arise if such a stay is made. The Service has received legal advice that such a stay would prevent the official receiver from taking any further action against the bankrupt or his/her property, while not requiring him/her to relinquish any control already obtained over the bankrupt’s property, unless the court orders him/her to do so. It is important that the court’s attention should be drawn to the difficulties caused to the official receiver by a stay of proceedings and any other possible prejudice that a stay may cause to creditors or third parties. In an unreported Court of Appeal case in 1969, re a debtor (No. 644)  BPIR 901, the judge, referring to a stay of all proceedings, said "only the rarest of circumstances can justify such a stay" and he went on to approve the arguments put by Counsel for the official receiver against a stay of proceedings, namely that the official receiver was prevented from obtaining a statement of affairs, holding a preliminary examination or otherwise carrying out his/her duties. Where the court does make an order staying the proceedings, the official receiver should always request that the stay be for a specific period of time and that the order states the purpose of the stay. The official receiver should ensure that he/she meets the terms of that order (without fail).
Stays of proceedings should be monitored by the official receiver. Where a stay of proceedings is in force and the official receiver has any concerns regarding the length of the stay, the wording of the order or how the official receiver’s statutory duties are to be carried out, he/she should seek the directions of the court to clarify as to how, if at all, he/she may administer aspects of the estate [Note 20]. Where a stay of all proceedings is in force and there is no prospect of the court agreeing to limit or lift the stay, the official receiver should ask the court to give explicit instructions on the effect of the stay.
The court also has power to stay proceedings under its inherent jurisdiction, or under the Civil Procedure Rules 1998 which apply to proceedings under the Act and the Rules with any necessary modifications, but such powers are rarely exercised in practice [Note 21].
Where the official receiver is receiver and manager and a stay of proceedings is in force, he/she is able to take no further action with regard to the bankrupt’s property (see also paragraphs 6.40 and 6.41). Where the official receiver is trustee and has taken property into his/her possession prior to the stay, he/she is not required to return it to the bankrupt unless the court specifically orders. The property will remain vested in any trustee until such time as the bankruptcy order is annulled.
When insurance has been effected prior to a stay of proceedings, the insurance should be left in force and steps should not be taken to cancel it, but care should be taken in effecting insurance during the period when the stay is in force. When the official receiver has no duty to insure the bankrupt’s effects during a period when a stay is in force, the official receiver should notify the bankrupt in writing that the he/she will be taking no steps to insure the effects whilst the stay continues.
Where the official receiver is concerned about the insurance of goods etc., he/she may seek the bankrupt’s agreement to the effecting of insurance or alternatively seek directions from the court under rule 10.3 but he/she should not take any action in contravention of the court’s order preventing him/her from acting in the bankruptcy.
If the official receiver effects insurance during the period of the stay without the appropriate authority and the order is subsequently annulled, he/she may not be able to recover the premiums paid.
Where a stay of proceedings is made under rule 6.208 [Note 22] , prior to the estate of the bankrupt vesting in the official receiver as trustee, pending an application for an annulment of the bankruptcy order, the bankrupt is still subject to the restrictions imposed on dispositions of property by section 284 [Note 23]. The official receiver may not be able to take action to prevent the bankrupt making a disposition contrary to section 284 but the disposition would be void in the event that the bankruptcy order was upheld and the stay lifted.
Where a stay of proceedings is granted [Note 24], the status of the bankrupt is unaffected by the stay of proceedings. The bankrupt remains subject to the disabilities of bankruptcy and the discharge period continues to run. Where the official receiver is concerned as to the ongoing length of the stay and the effect it is having, or might have, on the conduct of the bankruptcy proceedings, he/she should seek the directions of the court at any appropriate time [Note 25]. In a case where the stay of proceedings is being prolonged and the bankrupt has failed to co-operate, the official receiver should make such an application as early as possible, to ensure that he/she has sufficient time to apply for the suspension of the running of the discharge period, should such an application be considered necessary.
As the status of a bankrupt remains unchanged during the period that a stay is in force a bankrupt is capable of committing an offence e.g. a credit offence or an offence under section 11 of the Company Directors Disqualification Act 1986. In such circumstances consideration should be given to submitting a statement of facts to Authorisations Team (AT) or, where necessary, to seek AT’s advice. However, such enquiries should be confined to the Insolvency Service.
Notice to the official receiver of an appeal against a bankruptcy order (see paragraph 6.10), or of an annulment application, does not operate as a stay of proceedings but where the official receiver receives such notice he/she should only do the minimum necessary to carry out his/her statutory duties (see paragraph 6.29). The official receiver should manage this aspect of the case and in the event that matters become drawn out without any material progress being made, the directions of the court should be sought [Note 25].
Notice of the bankruptcy order must not be given in cases where a stay of proceedings is in force except insofar as the court directs on granting the stay or on the subsequent application of the official receiver.
The official receiver should email the Fees & Data Management team (F&DM team) in Estate Accounts Services (Birmingham)(EAS) at firstname.lastname@example.org immediately if :
When a copy of the gazette notice is generated by LOIS, it is automatically downloaded to a file that is monitored by CUST. This file is (automatically) added to by users throughout the day, then at 0500 hours each morning the file is automatically formatted. It is then available for the Fees & Data Management (F&DM) team, within the Estate Accounts Services (EAS) to access and deal with gazette notices, as appropriate.
Where it is possible to stop publication of the gazette, the F&DM team will allocate a unique security number and reply to the local office e-mail, with the security details. A copy of the e-mail should be placed on the case file.
Gazette notices are usually published on the second working day after receipt by the F&DM team. A gazette notice can only be stopped where notification is received before midday (12 noon) on the day before the publication date.
In practice, where documents have been printed, it is preferable if stayed
Gazette notices or suspended advertisements are removed from the file and destroyed to prevent mishaps occurring. It is better to act in this way, generating replacement paperwork if the stay/suspension is lifted, rather than leaving notices on the file which could be processed inadvertently at a later time contrary to any order staying advertisement or the whole proceedings. A file note may be added to the case file stating that the notices have been cancelled due to an order staying advertisement or the whole proceedings.
Even after a gazette notice has been published and the official receiver becomes aware that application for a stay has been made, he/she should notify F&DM team at email@example.com immediately to avoid further gazetting.
(Amended December 2010)
The Insolvency (Amendment) Rules 2009 came into force on 6 April 2009 (see chapter 5, part 1, paragraph 5.2 for an explanation of the transitional provisions). The revised Rules continue to require mandatory publication in the London Gazette of the making of a bankruptcy order, with any further advertising in addition to the notice in the Gazette to be at the discretion of the official receiver as office holder. In the rare cases where the official receiver has decided that local advertisement is appropriate, the official receiver must take immediate steps to stop (if possible) the advertisement on the making of an order for the suspension of advertisement. .
It should be noted that whilst an order suspending advertising is in force, any breach of that order may lead to legal proceedings being commenced against the official receiver.
At any time when proceedings on a bankruptcy petition are pending, or an individual has been adjudged bankrupt, the court may stay any action, execution or other legal process against the property or person of the debtor or bankrupt as the case may be [Note 26].
Following the implementation of the Insolvency (Amendment) Rules 2010 for post 6 April 2010 petition cases, details of a bankruptcy will remain on the IIR for a period of time even after an order for the annulment or rescission of the bankruptcy has been made [Note 27]. Where a bankrupt obtained a stay of advertisement or a stay of proceedings prior to an annulment or rescission hearing, details of the bankruptcy order will have been withheld from the IIR. If the bankrupt is subsequently successful with their application, the stay will generally cease to have effect and details of the bankruptcy and the annulment will be displayed on the IIR for either 28 days or three months, depending upon the grounds for the application. This could cause difficulties for the former bankrupt, particularly in an ‘ought not to have been made’ annulment where the stay was intended to protect his/her business or reputation.
Where a bankrupt seeking an annulment or rescission has obtained a stay, the official receiver should ensure that the bankrupt is made aware of the provisions regarding disclosure on the IIR. The bankrupt may then wish to seek a further order of the court to prevent disclosure on the IIR after the annulment or rescission. In these situations an order specifically referring to the IIR would be preferable as a general stay of advertisement would prevent the official receiver from notifying any third parties (who had been made aware of the proceedings) of the annulment.
Should a bankrupt who obtains an annulment or rescission also obtain an order of the court preventing disclosure on the IIR, immediate action must be taken to ensure that details of the bankruptcy and annulment are withheld from the IIR. Any details that do appear on the IIR which are subject to an order of the court preventing their disclosure, could result in a complaint to the Service. ISCIS must continue to be updated with details of the annulment / rescission and the stay must be shown as continuing. Additionally a call must be logged with the IBM helpdesk (0800 121 4517) providing details of the case and requesting that information regarding the bankruptcy and annulment / rescission be prevented from appearing on the IIR permanently. IBM will subsequently forward the request to the appropriate team in CWS who will carry out the action.