The Realisation of Assets

Part 4 The realisation of assets

September 2011 

31.0.74 Introduction

A liquidator is under a legal duty to maximise the funds available for creditors (see paragraph 31.0.04). A trustee in bankruptcy is under the same duty to maximise the value of the estate for the benefit of the creditors (see paragraph 31.0.08).


31.0.75 Maximising realisations and cancelling insurance

(Amended February 2014)

The official receiver should aim to maximise the amount of money realised to ensure that, as far as possible, the debit balance is cleared and funds become available for distribution to creditors. This may involve the disposal of a valuable asset for the best possible price. It may also involve the sale of a larger number of less valuable assets. Where the sale does not increase the debit balance the official receiver should ensure, wherever possible, that all available assets are realised. Once the assets have been sold, or otherwise disposed of, the official receiver should cancel any insurance in accordance with Paragraph 49.27B.


31.0.76 Realisation of assets where official receiver is receiver and manager (bankruptcy only)

The official receiver when acting as receiver and manager should not exceed his/her powers to sell goods that are likely to perish or diminish in value [Note 1]. The term goods is not defined by the Insolvency Act but should be taken to include all moveable property. Items such as land, and fixtures annexed to it, would be excluded. For further information see paragraphs 24.36 and 24.37. Where the official receiver is in doubt as to whether assets of significant value are perishable or likely to diminish in value he/she can apply to the court for directions [Note 2] as to disposal. The bankrupt and petitioning creditor’s solicitor should be notified of the application and their notification should be brought to the attention of the court.


31.0.77 Realisation of assets – companies

The official receiver should sell any assets that are likely to perish or diminish in value, for example seasonal goods such as Christmas stock, even where a liquidator other than him/her is likely to be appointed. An asset should also be sold where its net value would materially reduce due to related storage charges. Where agents are used they should be asked to account to the official receiver for the net sale proceeds.


31.0.78 Realisation of assets – general

Where the official receiver’s agents realise assets they should be asked to account to him/her for the net sale proceeds. Chapter 31 provides further information about dealing with the realisation of specific assets.


31.0.79 Employment of agents

The official receiver should usually use bonded agents/auctioneers to sell the assets of a bankrupt or company, (see paragraph 32.3.11 for further information). The official receiver should employ agents to collect and store assets pending their sale where he/she considers it practical and commercially worthwhile to do so,. The official receiver’s usual agents may provide a verbal indication of the value of the assets free of charge. Chapter 32.3, part 1 provides further general information regarding the employment of agents. Any instructions given to agents verbally should be followed up in writing to prevent a misunderstanding arising (see paragraph 32.3.18).


31.0.80 Assets of a specialist nature

Some assets may be of a specialist nature. In this instance, the official receiver may require a more formal valuation and/or professional advice on the best way of realisation. The official receiver may decide that his/her usual agents cannot provide sufficient information and that he/she needs more specialist advice from another agent. It is likely in these circumstances that a charge will be made.


31.0.81 Incurring or increasing a debit balance

If the employment of an agent will result in a debit balance above £500 being incurred the official receiver must obtain the approval of Technical Section prior to their employment. After deciding to employ agents and where the official receiver considers the matter urgent he/she may obtain Technical Section’s agreement verbally. The official receiver should then make and retain a file note of the telephone conversation. Written confirmation from Technical Section should be obtained as soon as possible. There are a number of exceptions to this policy outlined in paragraph 31.0.82. Before approaching Technical Section the official receiver should reasonably expect the sale of the asset will result in a net benefit to the estate. If the realisation of the asset is not going to result in a net benefit to the estate the official receiver should consider disclaiming his/her interest in that asset (see Chapter 34 for further details).


31.0.82 Where Technical Section approval is not required

Technical Section’s approval to incur a debit balance of more than £500 is not required where specific authority is given elsewhere in the Technical Manual. In addition authority to incur a debit balance above £500 is not necessary where the official receiver is acting to protect assets of uncertain value, for example, the employment of agents to value a lease. However where the costs of employing agents are particularly high because of the specialised nature of the item to be valued the authority of Technical section should be obtained.


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