PART 3
February 2013
SALE OF VEHICLES WITH REALISABLE VALUE
31.2.40 Sale of vehicles with realisable value – general
Where a motor vehicle has no third party interest (see Part 2) and is not exempt (see Chapter 30, Part 6), steps should be taken to dispose of it as soon as possible. Where the vehicle has a realisable value, this disposal should be by way of sale. As a vehicle is potentially a source of liability, the official receiver, as liquidator or trustee, should take steps to realise the vehicle without delay. This is the case even if a liquidator or trustee other than the official receiver is likely to be appointed (see Chapters 16 and 17).
Sale of a vehicle should not be left to the LTAU and should be dealt with by the official receiver with initial conduct of the case.
31.2.41 Vehicle not worth the cost of realisation
Where the vehicle is not worth the cost of realisation, reference should be made to Part 4 of this chapter.
31.2.42 Official receiver to appoint agents to sell vehicle
Due to the criminal penalties associated with the sale of an unroadworthy vehicle (see paragraph 31.2.50), The Service’s policy is that a vehicle should only be sold through agents. This will apply whether the official receiver’s is using local agents or a firm with national coverage such a Cartakeback (see paragraph 31.2.43).
31.2.43 Cartakeback auction service
Cartakeback provide a service whereby the firm will arrange for the sale of realisable vehicles under ten years old, by auction, for a flat fee of £150 plus VAT (£180), with the net sale proceeds being remitted to the estate. Official receivers are not obligated to use this facility, but it is probable that, in most cases where there is not a ready purchaser (introduced by the director/bankrupt, for example), this service will provide a better return than using local agents.
Cartakeback can be instructed to auction a vehicle through this link.
31.2.44 Sale of a vehicle where official receiver is receiver and manager
The official receiver may dispose of a vehicle notwithstanding that he/she is not the trustee if such early sale would be beneficial to the estate, for example, to avoid payment of storage charges [note 1]. The official receiver should, of course, consider whether the vehicle may be subject to a request from a bankrupt to be treated as exempt property (see Chapter 30, Part 6) before seeking to realise it.
The official receiver should ensure that matters are handled correctly in this regard, following the advice elsewhere in this chapter, for the benefit of the estate and also to avoid any criticism from any insolvency practitioner subsequently appointed as trustee.
31.2.45 Vehicle not to be sold at a loss
The official receiver should ensure that the agents’ costs justify the sale and that monies are realised for the estate from any sale, otherwise the official receiver should consider the vehicle to be not worth the cost of realisation and deal with the vehicle in line with the guidance in Part 4.
To obtain a valuation, the official receiver may refer to the Parkers Guide (which gives a ‘list’, or recommended, price) and/or classifieds listings sites such as ebay, Gumtree or Autotrader . Alternatively, some offices may have arrangements with their local agents to provide a valuation at no cost.
If the exact model of a vehicle is not known it may be established, using the registration number, on the following website - www.freecarcheck.org/.../FONT>.
31.2.46 Agreeing the price for the vehicle
As with all assets, the official receiver has discretion to negotiate a sale price for a motor vehicle (though this is likely to be best left to the agents, who will have greater experience in negotiating a sale). Whilst this means that the ‘recommended’ price (see paragraph 31.2.45) may not always be achieved, it does not mean that an unreasonably low offer should be accepted.
The agreed price should take into account the value of any personalised number plate (see paragraph 31.2.74) and the value of any remaining tax (see paragraph 31.2.70) or insurance (see paragraph 31.2.52).
31.2.47 Care to be taken where vehicle is or may be subject to finance
Where a vehicle is subject to finance that gives the lender ownership rights over the vehicle (see paragraph 31.2.26), the official receiver should not sell the vehicle unless written confirmation has been received that the finance company is content for the sale to proceed.
Where there is doubt as to the finance position of the vehicle, the agents (see paragraph 31,2.42) should be instructed to carry out a finance search before selling the vehicle. If this shows outstanding finance then the vehicle should only be sold if there will be a net benefit to the estate. The search will also assist in protecting the official receiver from any claim made by the finance company in the event that there was unregistered finance on the vehicle (see paragraph 31.2.48) [note 2].
31.2.48 The sale of a financed vehicle – consequences
Where the official receiver, as receiver and manager [note 3] or trustee [note 4], disposes of property not comprised in the bankruptcy estate where there are reasonable grounds for believing that he/she is entitled to dispose of that property he/she is not liable to any person in respect of loss or damage resulting from the seizure (except insofar as it can be shown the loss resulted from negligence).
Where a vehicle is subsequently found to be on finance and this was not known to the official receiver at time of sale despite all efforts to establish the correct position (the agreement was not registered on HPI (see paragraph 31.2.23), for example), the sale proceeds (less the official receiver’s costs of sale) should be submitted to the finance company.
31.2.49 Sale to party introduced by director or bankrupt
It is possible for the sale of a motor vehicle to be effected to a third party introduced by a director or bankrupt, but the sale should be conducted through agents (see paragraph 31.2.42).
In such a case, it is important that the administration of the case is not delayed unreasonably by negotiations regarding the sale, or the provision of paperwork regarding the sale and, where there are delays, the official receiver should not hesitate to instruct agents to sell the vehicle to another buyer.
31.2.50 Offence of selling an unroadworthy vehicle
It is a criminal offence for a person to sell or supply, or to cause or permit the sale or supply, of a vehicle which is in an unroadworthy condition [note 5].
The seller must be able to satisfy a court that he/she actually believed, at the time of the sale, that the vehicle was in a condition in which it might be used lawfully, or that the vehicle was not going to be used until it had been made lawful [note 6].
An offence is not committed where, in the course of trade or business, a person sells an unroadworthy vehicle in circumstances where he/she made the purchaser aware of the unroadworthy condition of the vehicle and the offence of using such a vehicle [note 7]. Such an exception would not be available to the official receiver, but would be available to his/her agents.
31.2.51 Change of registered keeper
If the sale of the motor vehicle results in a change of keeper (the person named as keeper on the V5) it will be necessary to inform the DVLA [note 8]. This is effected by completing section 6 'new keeper or new name/new address details' of the V5C. Both the keeper and the buyer must sign section 8 and send the V5C immediately to DVLA, Swansea, SA99 1BA. The buyer should also be passed the properly completed V5C/2 section.
The agents appointed to deal with the sale of a motor vehicle should be instructed to deal with this.
31.2.52 Insurance to be cancelled following disposal
(Amended February 2014)
Assuming there is no outstanding claim in relation to the policy, any insurance taken out by the company or the bankrupt over a vehicle should be cancelled as soon as the vehicle is disposed of and any unexpired premium paid should be recovered from the insurance company.
If the vehicle is being transferred to a third party introduced by the bankrupt with the intention that the bankrupt will continue to use the vehicle, the unexpired portion of the insurance should be taken into account when negotiating the sale, and it will then not be necessary to have the insurance cancelled.
Likewise, any insurance taken out by the official receiver over the vehicle should be cancelled in accordance with the guidance in paragraph 49.27B.
[Back to Part 2 – Vehicles subject to third party interests] [On to Part 4 – Disposal of vehicles with no realisable value]