13.7 Duty of co-operation in winding up
Where a winding-up order has been made, each of the persons mentioned below has a statutory duty to give to the official receiver such information as he/she may reasonably require concerning the company and its promotion, formation, business, dealings, affairs or property and to attend any meetings as the official receiver may reasonably require;Notes: [s235(3)]
An officer of a company may be required to submit a statement of affairs, and/or other accounts -see also Chapter 12 Part 2 - Statement of affairs.
The Guide for Directors to Compulsory Liquidation gives details of the information a director must supply to the official receiver and also gives brief details of the consequences of a failure to co-operate, such as public examination. The first appointment letter sent to directors also makes reference to section 235.
A failure to co-operate by a company officer, constitutes a criminal offence for which he/she may be prosecuted but does not immediately place him in contempt of court. Such conduct may also be taken into account in disqualification proceedings (see Part 11).
If a person fails to comply with an obligation imposed by the official receiver under section 235 without reasonable excuse, he/she is liable to a fine and, for continued contravention, a daily default fine.
If a person, without reasonable excuse, fails to submit a statement of affairs, he/she is liable to a fine, and, for continued contravention, a daily default fine.
In company cases the official receiver should only apply for the public examination of a company officer (or other person falling within section 133 in relation to that company) where he/she intends to question that officer before the court. If the official receiver simply wishes to enforce the officer’s co-operation, and does not intend to question him/her before the court, he/she should apply to the court for an order under rule 7.20 (see Part 6) requiring that the action be done or information provided etc (Re Wallace Smith Trust Co Ltd  BCC 707).
The official receiver can request that a rule 7.20 order have a penal clause inserted. If a company officer fails to comply with such an order the official receiver can make an application to court that the director be committed for contempt (see Part 7). When considering whether to apply for the public examination of an officer or for an order under rule 7.20 official receivers will be aware of the tolerance of their local courts and should use their own judgment to establish the correct method for enforcing co-operation in the circumstances of each case.
A reluctant company officer may be deterred from not co-operating by the knowledge that the court will either summon him/her to appear before it for examination or order him/her to comply. In some cases a letter drawing the officer’s attention in detail to the possible consequences of his/her failure to co-operate may be sufficient to encourage co-operation.
Notes: [sch 10]
Only in exceptional circumstances would a company officer be prosecuted solely upon the grounds of his/her failure to comply with his duties under section 235 (see Part 11). The official receiver will normally seek other means of enforcement as described elsewhere in this chapter, and consider a prosecution only after such other action has proved unsuccessful.
Failure to co-operate with the official receiver is also a matter which may be included in a disqualification report, but again it is only in exceptional cases that a report should be submitted if this is the sole matter of unfitness (see also Part 11).
It is usual for the official receiver to approach third parties such as accountants or solicitors to obtain information about the company in liquidation. In the first instance, such an approach may be made by telephone shortly after the making of the winding-up order, or by letter - see Chapter 3 Part 3 - Initial procedure when winding-up order is made.
Generally such information will be provided although there may often be delays in its production.
If there are unreasonable delays in the provision of information the official receiver may apply to the court for the private examination of the party concerned. A letter should first be sent drawing the person’s attention to section 236 and the procedures and possible consequences of a private examination. If the court considers that the examination was made necessary because information was unjustifiably withheld by the respondent, he/she can be ordered to pay the costs of the examination. Often the prospect of a private examination is enough to encourage the production of the information requested.
The official receiver, as liquidator, may require a person forthwith to pay, deliver, convey, surrender or transfer to the official receiver property, books, papers or records in his/her possession or control, to which the company appears entitled.
Notes: [s234(2), r4.185(1)]
Any person on whom a requirement under section 234(2) is imposed by the liquidator shall, without avoidable delay, comply with it.
Where a lien or charge is claimed see Chapter 9 Part 5 - Action against property of insolvent - liens. Liens are also dealt with in Chapter 10 Part 6 - Custody, preservation and destruction of records, as is the treatment of accountants’ working files. Where professional privilege is claimed see Chapter 64 - Professional privilege. See also Chapter 47 Part 1 and Part 6 -Disclosure.
Sections 234, 235 and 236 as referred to above also apply where a provisional liquidator is appointed.Notes: [s131(1)]
During a provisional liquidation, the official receiver may require the submission of a statement of affairs.
The functions and the powers of a provisional liquidator may be defined and limited by the court appointing him/her.
See also Chapter 2 Part 2 - Provisional liquidators and interim receivers.
The Insolvent Partnerships Order 1994 (IPO94) applies the Insolvency Act 1986 to the winding up of partnerships subject to various modifications. These modifications depend on the mode of winding up of the partnership.Notes: [IPO94 s7(1), s8(5)(6)(7), s9, s10(3)(4)(5)]
Where a partnership is wound up as an unregistered company, the partners have a duty to co-operate under the provisions of section 235. The consequences of a failure to comply with section 235 are described in paragraph 13.8. Where bankruptcy orders are also made against the partners the provisions of section 291 apply. The consequences of a failure to comply with section 291 are described in paragraph 13.19.
Where bankruptcy petitions are presented by or against the partners without winding up the partnership as an unregistered company, section 291 applies to the partners.Notes: [IPO94 s11(2)]
Partners may also be required to submit a statement of affairs -see also Chapter 12 Part 8 - Statement of affairs.
Notes: [IPO94 s7(1), s8(5)(6)(7), s9, s10(3)(4)(5) sch 4 part II para 10]
Where the partnership was wound up as an unregistered company, the partners will be subject to the same consequences as the directors of a company as described in paragraph 13.8.
Where bankruptcy orders were also made against the partners or if the individual partners are made bankrupt and the partnership is not wound up as an unregistered company, the partners will be subject to the same consequences as other bankrupts as described in paragraph 13.19.
Notes: [IPO94 Sch 8]
Where a partnership has been wound up as an unregistered company, the partners may be subject to disqualification proceedings. Failure to co-operate with the official receiver is a matter which may be included in any disqualification report prepared (see also Part 11).
Sections 234 and 236 (see paragraphs 13.10 and 13.11) apply where a winding up order has been made against the partnership. Where bankruptcy orders have been made against the partners (whether in conjunction with a winding up order against the partnership, or not) sections 312 and 366 apply (see paragraphs 13.22, 13.23 and 13.24).
A bankrupt has a duty to co-operate with the official receiver as follows;
Notes: [s291(1)(a) & (b)]
a) he/she is required to deliver possession of his/her estate, together with all books, papers and other records which relate to his estate and affairs (including any which would be privileged from disclosure in any proceedings) to the official receiver,
b) he/she has a duty to protect any property that cannot be immediately delivered to the official receiver.
c) he/she is to provide an inventory of his/her estate and any other relevant information and to attend on the official receiver as reasonably required, both before and after his/her discharge.
d) for bankruptcy orders made after 01 April 2004, he/she is required to provide any information that the official receiver reasonably requires in connection with the making of a bankruptcy restrictions order.
e) he/she is also required to give notice to the official receiver, when acting as trustee, if any property is acquired by or devolves upon him/her, or of any increase in his/her income, during the period of his bankruptcy.
f) where the bankruptcy order was not made on the bankrupt’s own petition, the bankrupt must submit any statement of his/her affairs required by the official receiver within the prescribed time - see also Chapter 12 Part 3 and Part 4 - statement of affairs.
g) the bankrupt may also be required to submit accounts in support of the statement of affairs, or if he/she continues to trade.
Notes: [s288, r6.64 to 6.66 as amended by the Insolvency (Amendment) Rules 2010 and r6.200]
The Guide to Bankruptcy details the bankrupt’s duties and section 291(1)(a), (2) and (6) are reproduced in form NTB2 which are both sent to the bankrupt with the letter setting his/her first appointment.
Broadly similar duties as those described above are imposed on the bankrupt in relation to his/her trustee, if other than the official receiver
The EA2002 section 256 amends section 279 of the Insolvency Act 1986 and after 01 April 2004 a trustee other than the official receiver also has the power to make an application for the suspension of the bankrupt's discharge.
A bankrupt who, without reasonable excuse, fails to comply with his/her legal responsibilities to the official receiver does not commit a criminal offence but is immediately placed in contempt of court (see Part 3) for which he/she may be punished accordingly . It will, however, be only in exceptional circumstances that application will be made for a warrant for the arrest of a bankrupt solely upon the grounds of his/her failure to comply with his duties under section 291. The official receiver will normally seek other means of enforcement for example public examination and consider an application for a warrant for arrest only after other action has proved unsuccessful.
In bankruptcy cases, the holding of a public examination may prove the most effective course for enforcing any duty of co-operation. This course should always be considered as a means of enforcing attendance upon the official receiver and/or to obtain the submission of a statement of affairs or the delivery of property or records. A reluctant bankrupt may be deterred from non co-operation by the knowledge that he/she will otherwise be required to submit to an examination in court. See also Part 4 of this chapter and Chapter 14 - Public examinations.
Alternative action may include seeking court orders (see Part 6), or seeking to suspend the bankrupt’s discharge or making application to the court to redirect the bankrupt’s post (see Part 9).
It is usual for the official receiver to approach third parties such as accountants or solicitors to obtain information about the bankrupt. In the first instance, such an approach may be made by telephone shortly after the making of the bankruptcy order, or by letter - see Chapter 4 Part 3 - Initial procedure when bankruptcy order is made.
Generally this information will be provided although there are often delays in its production.
If there are unreasonable delays in the provision of information the official receiver may apply to the court for the private examination of the party concerned. A letter should be sent first drawing the person’s attention to the provisions of section 366 and the procedures at a private examination, including the possibility of the court making an order for the respondent to pay the costs of the examination. Often, the prospect of a private examination will be enough to encourage the party concerned to provide the information .Notes: [r9.6(1)]
Where a lien or charge is claimed reference should be made to Chapter 9 Part 5 -Action against property of insolvent. Liens are also dealt with in Chapter 10 Part 6 - Custody, preservation and destruction of records, as is the treatment of accountants’ working files.
A solicitor cannot claim legal professional privilege in the case of an order under s 366 to extend to anything which the client himself/herself could lawfully be required to reveal. In other words the client cannot hide behind his/her lawyers and avoid disclosure on the ground that the information is protected by privilege. The fact that confidential information might be in the hands of the lawyers and not the client does not alter the trustee's entitlement to it (Re Mujani  1 WLR 1498). Reference should also be made to Chapter 64 - Professional privilege and Chapter 47 Part 1 and Part 6 - Disclosure.
Any banker or agent of the bankrupt or any other person who holds any property of, or for, the bankrupt, shall pay or deliver to the trustee all property in his/her possession or under his/her control which forms part of the bankrupt’s estate and which he/she is not by law entitled to retain as against the bankrupt or trustee.Notes: [s312(3)]
If a person without reasonable excuse fails to comply with any obligation imposed under section 312, he/she is guilty of a contempt of court and liable to be punished accordingly.
Where an interim receiver has been appointed, the debtor shall give him/her such inventory of his/her property and other information, and shall attend such meetings as the interim receiver may for the purpose of carrying out his functions reasonably require.Notes: [s286(5)]
Notes: [s366 and s368]
Reference should also be made to Chapter 2 Part 2 - Provisional liquidators and interim receivers.
The Administration of the Insolvent Estates of Deceased Persons Order 1986 extends and modifies the provisions of the Insolvency Act 1986 to the administration in bankruptcy of insolvency estates of deceased persons. Where an insolvency administration order has been made against a deceased insolvent the personal representative (for the definition of a personal representative see Chapter 54 Part 3 -Deceased Insolvents) has similar duties with regard to co-operating with the official receiver as would a bankrupt. The personal representative should notify the official receiver of any assets which may be claimed by the trustee, provide the official receiver with an inventory of the estate, attend such meetings and provide information as the official receiver may reasonably require.
Notes: [Administration of the Insolvent Estates of Deceased Persons Order 1986 sch 1, part II para 17] [s291]
If the personal representative does not comply with his/her obligations to co-operate with the official receiver, he/she is guilty of a contempt of court and liable to be punished accordingly.
[Administration of the Insolvent Estates of Deceased Persons Order 1986 sch 1, part II para 17]
[DPO86 sch 1, part II, para 30]
The official receiver or trustee may apply for the private examination of the personal representative. Other parties may also be privately examined.Notes: [s366]
If enforcement action is taken by the official receiver, he/she should remember that the obligation to co-operate with him/her is subject to two qualifications:
a. that the requirement which has not been complied with was reasonably required by the official receiver, and;
Notes: [s235(2) s291(4)]
b. that the person concerned had no reasonable excuse for failing to comply.
Notes: [s235(5) s291(6)]
The official receiver must therefore ensure that his/her request for action by, or information from, the person concerned was reasonable in all the circumstances. He/she should also seek a reason for the non co-operation and, if a reason is given, consider its’ validity before deciding how to proceed.