Other legal proceedings
A creditor in respect of a debt provable in the bankruptcy is generally unable to instigate legal proceedings for recovery against the bankrupt without the leave of the bankruptcy court and on such terms as it may impose [Note 1]. The exceptions include enforcement proceedings [Note 2] and a landlord’s limited right to distress [Note 3]. For further information regarding enforcement proceedings see Chapter 9, part 2. For further information regarding distress see Chapter 9 part 1.
If the official receiver becomes aware of an action being taken by a creditor, other than a secured creditor for recovery of the property over which it holds a charge, he/she should inform the relevant court, the creditor bringing the action and/or their solicitor of the making of the bankruptcy order and its effect. A timely notice by the official receiver may prevent the creditor from incurring any further costs and prevent the possibility of an attempted execution which could put the estate at risk.
Where the official receiver becomes aware that matrimonial proceedings are ongoing or pending he/she should immediately notify the relevant court, the bankrupt’s solicitors, the bankrupt’s spouse and his/her solicitors of the bankruptcy order. The official receiver should attempt to stay or adjourn the proceedings in the family court until a trustee is appointed. The bankrupt continues to own his/her assets up to the vesting of the estate in the trustee although he/she cannot dispose of them without the consent of the bankruptcy court [Note 4]. If the bankrupt obtains its consent, or the court subsequently ratifies the settlement, the disposition of property may not be upset by the trustee (see Haines v Hill & Anor  EWCA Civ 1284). In these circumstances, early steps should be taken to appoint a trustee. The official receiver or, if appropriate an insolvency practitioner, should be appointed so that the property is no longer owned by the bankrupt, but vests in the trustee. If it is appropriate for an insolvency practitioner to be appointed as trustee, then an application for a Secretary of State appointment should be made. (See Chapter 17, part 5 for further information.)
If the bankrupt applies to court under Section 284 of the Insolvency Act 1986 to approve a matrimonial settlement that affects his/her property and/or income the official receiver should consider opposing the application to protect the estate. This should only be done after the official receiver has obtained legal advice, has adequate funds or indemnities to cover the likely costs, including any potential adverse costs, and there is likely to be a reasonable benefit to the estate.
The official receiver, as receiver and manager, does not have a duty to provide information to third parties for the purpose of ascertaining whether any rights have been transferred to and vested in them by the above Act and for the purpose of enforcing such rights. The official receiver only becomes liable to provide information under this Act when he/she becomes trustee (see paragraph 79.5 in particular and Chapter 79 generally for more information).
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