Application for examination

Part 2 - Application for examination

April 2000

14.3 Persons who may be examined – companies

(amended February 2012)

Where a company is being wound up by the court, the official receiver may apply to the court for the public examination of any person who –

Notes: [s133 and form PEAO]

  1. is or has been an officer of the company (i.e. a director, secretary, manager or in certain circumstances the auditor except where he has been appointed for a limited purpose - see also chapter 12); or
  2. has acted as liquidator or administrator of the company or as receiver or manager; or
  3. not being a person falling within a) or b) above, is or has been concerned, or has taken part, in the promotion, formation or management of the company.

Note: [s133(1)(a)] [s133(1)(b)] [s133(1)( c)]

The word director is defined in section 250 of the Companies Act 2006 (CA 2006) as including ‘any person occupying the position of director, by whatever name called’. It is strongly arguable that this definition includes a de facto director, although the definition is silent as to whether formal appointment as a director is actually necessary. Given this uncertainty an application in the case of a de facto director should be made under section133(1) (a) and (c) of the Insolvency Act 1986.

Notes:[CA 2006 s 250, 1121 (2), s 1173 (1) and Schedule 8 CA 2006]

An application in respect of a shadow director (see paragraphs 75.80 and 75.81 for a definition) or other person who has taken part in the promotion, formation or management of the company should be made under s133(1)(c) see paragraph 14.9 below. 

 

14.4 Persons who may be examined – partnerships

Where a winding-up order has been made against a partnership as an unregistered company, the official receiver may apply to the court for the public examination of:

  1. any person who is or has been an officer of the partnership; or
  2. has acted as liquidator or administrator of the partnership or as receiver or manager; or
  3. not being a person falling within paragraph (a) or (b), is or has been concerned, or has taken part, in the formation of the partnership.

Notes: [sch 3 part II para 8, sch 4 part II para 11, sch 5 para 2, sch 6 para 4 Insolvent Partnership Order 1994] (IPO1994)

Where orders have been made against the members of an insolvent partnership on a joint bankruptcy petition, without a winding up order being made against the partnership, the official receiver may apply to the court for the public examination of those members.

Note: [sch 7 para 9 IPO1994] 

 

14.5 Partnerships - variation in procedure

The provisions relating to public examination are modified where a partnership is concerned as follows:-

  1. Where insolvency orders have been made against the members of an insolvent partnership, whether or not a winding-up order has been made against the partnership, application may be made to the court that the public examination of a member of the partnership may be combined with the public examination of any other person. This enables all the public examinations of the partners to be held together.
  2. Where insolvency orders have been made against the members of an insolvent partnership, and no winding-up order was made against the partnership, at his/her public examination a member may be examined as to the affairs and dealings of the partnership in addition to his/her own affairs and dealings.

Notes: [sch 4 para 11 IPO 1994] [sch 7, para 9 IPO 1994] [sch 7, para 9 IPO 1994] 

 

14.6 Persons who may be examined - bankruptcy

(Amended August 2011)

Where a bankruptcy order has been made, the official receiver, may apply to the court for the public examination of the bankrupt at any time prior to his discharge, although the public examination itself may occur post discharge.  It should be noted that where a public examination takes place after the date of discharge the option to ask for a suspension of the bankrupt’s automatic discharge is not available.

Notes: [form PEAO] [s290]

 

14.7 Time of examination

(Amended August 2011)

A public examination can be held at any time before:

a) the company’s dissolution;

b) where a winding up order has been made against a partnership as an unregistered company, before the winding up is complete;

An application for the public examination of a bankrupt must be made prior to the bankrupt’s discharge although the hearing itself may be held at any time.  It should be noted however that the official receiver will not be able to seek the suspension of the bankrupt’s automatic discharge if the hearing is held after discharge (see paragraph 14.6). 

Notes: [s133 (1)][s279(3)][sch 3 part II para 8, sch 4 part II para 11, sch 5 para 2, sch 6 para 4 IPO 1994] 

 

14.8 Contents of application

An application to fix a date for a public examination hearing need not contain a lengthy justification for the proposed examination, but the application should always contain a statement of the basic ground for the application (e.g. failure to co-operate, need for further information, etc.).

Notes: [form PEAO]

In a winding up the application should state whether the proposed examinee falls within section 133(1)(a), (b) or (c) (see paragraph 14.3). Where he falls within section 133(1)(a) it will suffice to state that he was recorded on the registrar of companies’ file as a director or secretary. In the case of a person falling within section 133 (1)(b), brief details should be stated of the grounds for supporting that he falls within that paragraph. Where application is made under section 133(1)(c) see paragraph 14.9 below.

The court has no discretion but must make an order for public examination on application by the official receiver (subject to rule 4.211(4) see paragraph 14.9) but can generally revisit any order made, in accordance with rule 7.47 and section 375. 

 

14.9 Application under section 133(1)(c) - shadow directors etc

(amended February 2012)

Where an application to fix a date for a public examination hearing relates to a person falling within section 133(1)(c), the official receiver must lodge in court with his application a report indicating the grounds on which the person is alleged to fall within that paragraph. This may involve a claim that the person concerned was a shadow director. The report should also indicate whether in the official receiver’s opinion service of the order could be effected at a known address. For post 6 April 2010 petition cases service of the order at a known address should be effected in accordance with the provisions of Part 6 of the Civil Procedure Rules 1998 (in pre 6 April 2010 petition cases service by post is required) (see paragraph 14.18).

Notes: [r4.211(2)(a)][Companies Act 2006 s251][r4.211(2)(b) as amended by the Insolvency (Amendment) Rules 2010] [r12A.16 and 17]

Form PEAO may be edited to remove the sentence which refers to the examinee being recorded at Companies House as a director, and appropriate text inserted detailing why the official receiver believes the examinee falls within section 133(1)(c). Alternatively, a short report to court may be prepared.

Notes: [r4.211(3) as amended by the Insolvency (Amendment) Rules 2010]

Where service in accordance with rule 4.211(2)(b) seems uncertain, the court may direct that the order be served by some other means other than, or in addition to, service under this rule.

Notes: [r4.211(4)]

Any order issued by the court in relation to a person alleged to fall within section 133(1)(c) can be rescinded by the court if it is satisfied that he does not in fact fall within that paragraph of the subsection. 

 

14.10 Address for service

In winding up, partnership or bankruptcy the proposed method of, and address(es) for, service of the court’s order for the examination, and the reason for the use of each address, should also be stated in the application.

Where an insolvent has previously attended for interview, the address given at that interview should be used. Where a considerable period of time has elapsed between the interview and the fixing of the public examination, the proposed examinee’s continued occupation of that address should be verified by making enquiries or by inspection. Otherwise the address for service used will usually be that given on bankruptcy order or for a company director the Companies House file. Where a winding-up order is made against a partnership as an unregistered company without bankruptcy orders being made against the members of the partnership, the official receiver will have to rely on his own enquiries to establish the partners’ addresses.

To ensure, as far as is possible that the address used is correct, further enquiries as listed below may be necessary, although some of the following enquiries may have been carried out in the initial stages of the cases:-

  1. inspection of any known addresses
  2. directory enquiries and any entries in telephone directories
  3. petitioning creditor’s solicitors
  4. insolvent’s own solicitors or accountants
  5. judgment search or electoral roll search
  6. local Inland Revenue or HM Customs & Excise offices

Service should be effected at any alternative addresses discovered during the course of the enquiries set out above.

Where a bankrupt, or a bankrupt member of a partnership is to be examined the official receiver should search the court file to ensure that all known addresses are included, as the statutory demand or petition may have been served at additional addresses not shown on the bankruptcy order.

The official receiver should also state that he is not aware of any other address(es) for the examinee. All this information will assist the court in the issue of a warrant for arrest should the examinee fail to attend his examination and therefore care must be exercised that the information provided is accurate.

Note: [s134(2) or 364(1) and r7.22 as amended by the Insolvency (Amendment) Rules 2010]

For further information regarding service of the order see paragraph 14.18. 

 

14.11 Address unknown.

Where the examinee’s current address is unknown it may be possible to effect service through his/her solicitor or accountant, although, their willingness to accept service on behalf of the examinee should be ascertained before making an application to the court for a public examination.

If the official receiver has no known address or other known route as to how to contact the potential examinee there is usually no benefit in fixing a public examination as the court is unlikely to issue warrants or orders in such circumstances, but see the following paragraph in respect of the suspension of bankruptcy. If there is a potential to contact the examinee through some route other than normal service (i.e. third parties) an application for an order for substituted service should be considered, although with the wider range of service options that are now available the need to make an application for substituted service is less likely. See paragraph 14.18 and chapter 19, part 7 – service of documents.

In bankruptcy cases, application to the court to suspend the bankrupt’s discharge should be used as an alternative to fixing a public examination where the bankrupt’s current whereabouts are unknown. There is a difference in approach in the High Court in London, in that a public examination is held even in non trace cases, and application to suspend the bankrupt’s discharge made at the public examination rather than a separate application being made under section 279. There is nothing preventing a distinct application under s279(3), in any court, if it is appropriate in the circumstances.

An application under s279(3) will usually be appropriate if there is any risk that the bankrupt will be discharged before the public examination comes before the court. Last minute applications under s279(3) are rarely well received by the court.

 

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