Where a bankrupt has not entered into an IVA prior to the bankruptcy and he/she has assets or there is the obvious potential for an IVA to be proposed his/her attention should be drawn to the voluntary arrangement provisions. Where the official receiver does not wish to act as nominee under the EA2002 fast track provisions section 236A - G (see Part 6) the bankrupt should be supplied with a list of the local insolvency practitioners on the official receiver's rota with whom he/she can discuss the matter. It should be made clear to the bankrupt that the official receiver will continue to administer the bankruptcy in the usual way until the court makes an interim order under s255 or an order under s261 relating to the future conduct of the bankruptcy proceedings.
Notes: [s255 and s261] [s252 to 263A -G]
Where an undischarged bankrupt intends to make a proposal for an IVA, the official receiver, the trustee or the bankrupt may apply for an interim order which will provide a moratorium for the insolvent debtor. The official receiver is only expected to make such an application in exceptional circumstances (e.g. where the bankrupt is through mental or physical incapacity unable to take the necessary steps and no person can be found who can adequately deal with these matters on his/her behalf).
Note: [s253(1) and (3)]
As a result of amendments made by the IA2000 an interim order is not a requirement of an IVA and the debtor may apply for an IVA without also making application for an interim order. For further details of the IVA procedure without an interim order see paragraph 57.13.
When an application for an interim order is made the court may stay any proceedings against the bankrupt but the official receiver should continue to administer the bankruptcy in the normal way unless the court orders otherwise. As a stay may involve the whole of the bankruptcy proceedings, the official receiver must ensure that he is aware of the manner in which the bankruptcy is to be conducted while any interim order is in force. If the stay will cause any obvious problems in the bankruptcy, the official receiver should refer the matters to the court (see paragraph 20.38) and obtain directions.
Note: [s 254; r6.34(2) or 6.46(2); Form 6.26] [r6.34(3) or r6.46(3)]
During the period of the stay the bankrupt will continue to be subject to bankruptcy restrictions and an application for an annulment can still be made. See Chapter 6 and Chapter 6A for more details of stays and annulments.
During the period for which the interim order is in force
without the permission of the court.
A secured creditor may still take steps to enforce his security whilst an interim order is in force provided that he does not need to commence or continue proceedings, execution or other legal process, e.g. obtaining an order for possession, in order to do so.
If the official receiver is aware of any undisclosed information that may affect the views of creditors when considering the debtor's proposal this should be brought to the court's attention either in person or by way of a report at the hearing of the interim order. If the interim order is made, or it is case where no interim order is sought, that information should also be drawn to the nominee's attention. Any further undisclosed information that comes to the official receiver's attention should also be brought to the attention of the nominee. The official receiver should also request that the nominee bring to the attention of the meeting of creditors any matters not included in his report which the official receiver considers could have a bearing on the creditors’ decision to approve the proposal.
If material facts are not disclosed or false representations are made to persuade the creditors to approve the IVA the official receiver should also consider reporting the facts to Prosecution Unit as a criminal offence.
In every case the nominee must serve the official receiver with a copy of the debtor's proposal (including any amendments), a copy of the nominee’s report with any comments and a copy or summary of the statement of affairs. For cases with no interim order the official receiver should additionally be sent:-
On receipt the official receiver should examine these documents and draw the nominee's attention to any obvious discrepancies. The official receiver should ensure that provision has been made for the payment of the costs, fees and expenses of the bankruptcy and provide the nominee with an estimate of the total costs. The official receiver will normally accept an undertaking under rule 5.26(3) for the payment of those costs.
Notes: [r5.26] [r5.11(6)] [r5.14A (3) and (4)]
If no insolvency practitioner trustee has been appointed the official receiver will continue as receiver and manager or trustee until the IVA is implemented and should continue to administer the bankruptcy (subject to the terms of any interim order) including paying any money received into the Insolvency Services Account in the usual way. The court may exercise its powers to vary the normal bankruptcy procedures during the period of an interim order, for example, a continuing business where it may be necessary to use the assets of the business to enable it to continue as a going concern. The official receiver should seek to ensure that the court order does not leave him/her in any doubt as to how to deal with any property and by whom and also does not place any onerous duties on him/her.
Note: [s255(3) and (4)]
After the conclusion of the meeting of creditors the chairman of the meeting must prepare a report of the meeting.
Where an interim order is in place, the chairman of the meeting must report the result to court and give notice of the result to the creditors and to the official receiver.
Where no interim order is made, the chairman of the meeting of creditors must report the result to the creditors . Notice must also be sent to the official receiver.
Note: [s259(1); r5.27(4)]
The official receiver may challenge the decision of the creditors' meeting, within a period of 28 days from the date on which the report of the creditors' meeting was filed at court or, where filing at court is not required, the date on which notice of the result of the meeting was given to prescribed third parties (see paragraph 20.32). The grounds for a challenge are that the arrangement unfairly prejudices the interests of a creditor or the debtor or that there has been some material irregularity at, or in relation to, the meeting of creditors. The official receiver is only expected to make such an application in exceptional circumstances.
Notes: [r5.22(3) and (6)][s262]
Where a voluntary arrangement proposed under section 256 is not approved by the creditors' meeting any interim order will continue to have effect until it expires or the court orders its discharge following the receipt of the chairman's report. If the official receiver needs to proceed with the bankruptcy before the interim order ceases to have effect he/she should make an immediate application to the court for directions with a view to obtaining the discharge of the interim order and any stay of proceedings.
Notes: [r10.3][s259(2)] [s256]
Where the creditors' meeting approves the proposal it takes effect from the date of the meeting. It binds every person who was entitled to vote at the meeting, whether they were present, represented or not, and every person who would have been so entitled if they had had notice of the meeting. Any interim order in force will cease to have effect at the end of a period of 28 days from when the report of the creditors' meeting was filed at court.
Note: [s260; s261]
Once a proposal is approved the IVA should get under way as soon as practicable, subject only to being halted by a challenge under s262 (see paragraph 20.33). The official receiver should hand over the property included in the IVA as soon as practicable after the creditors' meeting. A receipt should be obtained for any physical assets held by the official receiver. A handover to a supervisor does not involve the record book, estate cash book or other documents usually handed over to a trustee (see Chapter 17).
Any assets not included in the IVA should remain in the control of the official receiver as receiver and manager or trustee until the bankruptcy order is annulled or other directions for their disposal are made by the court.
When the supervisor takes possession of the assets he/she is required to discharge any balance due to the official receiver in respect of fees, costs, expenses and remuneration. Where there are insufficient funds in the hands of the official receiver to be retained to pay those costs he/she should obtain a written undertaking from the supervisor, before handing over the assets, to pay those costs out of the first realisation of assets. The official receiver’s costs take priority over sums due to a trustee in the bankruptcy proceedings.
Note: [r5.26(2) and (3)]
Where a creditors' meeting has approved an IVA the court shall, on the application of the bankrupt or where the bankrupt fails to make an application the official receiver, annul the bankruptcy.The court may give such directions about the conduct of the bankruptcy and the administration of the bankruptcy estate as it thinks appropriate for facilitating the implementation of the approved voluntary arrangement.
The bankrupt's application for the annulment of the bankruptcy order should be supported by a witness statement stating that the IVA has been approved by a meeting of creditors, the date on which it was approved and that the 28 day period in which the decision of the meeting may be challenged (see paragraph 20.33) has expired.
For cases where the petition was presented before 6 April 2010, the bankrupt must give the official receiver, any insolvency practitioner trustee and the supervisor of the IVA not less than seven days notice of the hearing of the application. For cases where the petition was presented on or after 6 April 2010, the notice period referred to above is amended to not less than five business days.
The official receiver may attend the hearing or be represented and draw to the attention of the court any relevant matters he/she thinks appropriate.
Where the court annuls the bankruptcy order it will send sealed copies of the order of the annulment to the bankrupt, the official receiver, any insolvency practitioner trustee and the supervisor of the IVA.
Note: [s261, s262; r5.52] [Form 5.7]
If the bankrupt fails to make an application for the annulment of the bankruptcy order, the official receiver may apply. The official receiver may not make the application before the expiry of 42 days beginning with the day on which the nominee filed the report of the creditors’ meeting with the court or, where that is not required, the date on which the nominee sent notice of the result of the creditors’ meeting to creditors.
The official receiver's application should be supported by a report stating the grounds on which the application is made and contain a statement that the time period above has expired and that he/she is not aware that any application or appeal remains to be disposed of.
Where the court annuls the bankruptcy order it will send notice of the annulment to the official receiver, any insolvency practitioner trustee, the supervisor of the IVA and the bankrupt.
Where the bankruptcy order is annulled the official receiver must notify all creditors of whose address he/she is aware, of the annulment.
Expenses incurred by the official receiver in giving notice of the annulment to the creditors are a charge in his/her favour on the property of the former bankrupt.
The former bankrupt is entitled to request, in writing, within 28 days of the making of the annulment order, that the Secretary of State give notice of the annulment of the bankruptcy in the gazette and in the same manner as the bankruptcy order was originally advertised (if it was, in fact, originally advertised). The official receiver is responsible for dealing with these requests and the costs of such publication are met from the administration fee. See also Chapter 5, paragraph 5.30.
Notes: [r5.53; r5.56] [r5.60]
Where the IVA fails the supervisor may apply to the court for directions or may present a bankruptcy petition.
Where the original bankruptcy order was annulled and the petition dismissed a new petition can be presented by the supervisor, a creditor or the debtor.
Note: [s264(1)(c)] [s276]
A database of IVAs is kept by Insolvency Practitioners Unit and the information is available on the Individual Insolvency Register (IIR) which is open to the public free of charge through the Insolvency Service website. The chairman of a creditors' meeting approving an IVA is required to provide details of the arrangement to the Secretary of State for registration. The Rules specify the information which must appear on the IIR, subject to any order under the ‘persons at risk of violence’ provisions. The official receiver can view the register through the Central Index.
All information concerning an IVA will be deleted from the register of IVAs where a notice that the IVA has been revoked, fully implemented or terminated has been received. For cases where the nominee agreed to act in an IVA on or after 6 April 2010, a period of 3 months must have elapsed from receipt of the above notice, before information regarding the IVA can be deleted from the register.
Notes: [r6A.3] [r6A.2A] [r5.67] [6.235B]