January 2008

25.61 Restrictions on revocation of a county court administration order

Although IA 86 section 429 [Note 1]does not apply to an individual against whom a bankruptcy order has been made, the official receiver should be aware of its provisions since a person who has been subject to an administration order and who has had that order revoked due to failure to make payments may subsequently be made bankrupt. See chapter 57 for more information regarding administration orders.

25.62 Disabilities where administration order is revoked

Where the court revokes an administration order due to the individual concerned failing to make required payments, it may direct that section 12 of the CDDA 86 shall apply. Section 12 provides that such a person shall not (except with the leave of court) act as a director or liquidator of, or directly or indirectly take part or be concerned in the promotion, formation or management of, a company. The maximum period for such a disqualification was 2 years but is amended by EA 2002 to one year to reflect the fact that the restrictions following a bankruptcy order will only take effect for up to one year. [Note 2]

25.63 Restrictions applicable under an administration order (IA86 section 429)

As in the case of bankruptcy, a person to whom section 429 applies is prohibited from obtaining credit to the extent of the prescribed amount or greater as set out in s360 (1)(a) and is prohibited from entering into any transaction for the purpose of any business in which he is engaged, without first disclosing that the provisions of section 429 apply to him/her. A person contravening the provisions of this section is guilty of an offence and liable to imprisonment or a fine, or both.

25.64  Fit and proper person

There are instances in legislation, regulations, bye-laws and private club rules of restrictions which refer to the individual being a ‘fit and proper person’ which may disqualify an undischarged bankrupt, but with the concept of culpable bankruptcy introduced by EA 2002 and the BRO available where the conduct of the individual in question is taken into account, it may be that bankruptcy in itself will not lead to the restrictions being exercised unless the bankruptcy leads to the making of a BRO which would give an indication that the person is not fit and proper. For example, an individual who applies to the local police for a taxi licence must be considered a ‘fit and proper person’. It is not a matter for the official receiver to determine whether such discretionary disqualifications/restrictions imposed by non-insolvency legislation should be applied against an individual who is an undischarged bankrupt (or an individual subject to a BRO/IBRO or BRU).

25.65 Enlistment in the armed forces

Under the rules for enlistment in the Army, Navy and RAF a bankrupt is not permitted to enlist whilst remaining undischarged from the bankruptcy proceedings.

25.66 Professional bodies

Bankruptcy may also affect a person’s membership of professional bodies - see paragraphs 4.61 and 59.4 for further information.

25.67 Disciplinary matter for employees

In other circumstances, the fact of an individual’s bankruptcy may render him /her subject to disciplinary procedures according to the terms of his/her employment.

[Back to Part 2] Restrictions imposed on bankrupts by other legislation