February 2012



32.4.23 Initial evaluation and report by special manager

Where the appointment of a person to act as special manger is by the court the official receiver will agree with the special manager the method and frequency with which he will report to him/her. The official receiver is likely to require a verbal daily report  with a written report, by the end of the first week, to include:

  • anticipated recoveries – containing an explanation as to why continued trading will provide a better return for creditors;
  • cash flow projections;
  • trading accounts, where appropriate;
  • details of steps taken to protect the assets and how the position of  creditors will be protected.

It must be appreciated that trading does not have to be ‘profitable’ according to the normal rules of accountancy; what is being sought is an end position which gives a better result for creditors than would be achieved by an immediate cessation of business and an auction sale of assets on a piecemeal basis. It should be noted that the special manager has no right to close the business without the consent of the court.


32.4.24 Powers of special manager are conferred by court

A special manager is an officer of the court. The power of the special manager to exercise functions is conferred by the court [note 1] [note 2]  and the special manager exercises them as a principal and appointee of the court. The official receiver should not request a special manager to perform acts in respect of which the official receiver has no statutory right to undertake himself/herself, nor should the official receiver request a special manager to discharge any responsibility outside the powers granted to him/her by the court.


32.4.25 Powers of special manager

It will normally be appropriate to request the court that the special manager appointed has the following powers:

(a) To advise and assist the official receiver in his/her administration of the estate.

(b) To be at liberty to act for the official receiver (and the company, debtor or bankrupt as appropriate) in connection with taking possession, gathering in and protection of assets of the estate; (where the official receiver is acting as provisional liquidator or interim receiver and the assets comprise perishable items or other goods or property which need, for whatever reason, to be disposed of quickly, there may then need to be a specific reference to that position).

(c) That any provisions of the Insolvency Act 1986 relating to the official receiver, provisional liquidator, liquidator, interim receiver, or trustee are to have effect in relation to the special manager for the purpose of the carrying out by him/her of any functions of the official receiver [note 3 and note 4].


32.4.26 Additional powers of the special manager

The official receiver may request that the special manager has the following additional powers where appropriate in a particular case for the efficient administration of the estate:

(a) To manage any specified business and branches thereof carried on by the insolvent at the specified address of such business or branch.

(b) To employ and remunerate any necessary staff (see paragraph 32.4.27).

(c) To discontinue any part of a business when desirable in the interests of the estate.

(d) To receive book debts and give an effective discharge of them (see Chapter 31.1, paragraph 31.1.42).

(e) To discharge all costs, expenses and outgoings necessary for the continuation of the business.

(f) To effect all necessary insurances including third party risks.

(g) To open such bank accounts and deposit account facilities as may be necessary for the proper conduct of the business (see paragraphs 32.4.41-42).

(h) To invest surplus funds at interest.

(i) To take such other steps as may be necessary for the protection of the official receiver, the estate and the business.


32.4.27 Employment or dismissal of employees

If employees are to be retained, reference should be made to Chapter 62, paragraphs 62.19 and 62.20.

If employees are dismissed the notices affecting dismissal should be issued by the official receiver as provisional liquidator, liquidator, interim receiver or trustee and not by any special manager who may, if he/she issues such notices, become personally liable in relation to the termination of employees’ contracts.


32.4.28 Duties of a special manager

When the appointment of the special manager is confirmed his/her attention should be drawn to the following matters as appropriate:

(a) He/she will be responsible to and will act under the supervision of the official receiver (see paragraph 32.3.39).

(b) The agreed reporting process. He/she should submit an initial report on the affairs of the insolvent to the official receiver as soon as possible (preferably within two weeks of the appointment). The official receiver may additionally required a daily verbal report in the first few days following appointment.

(c) He/she must make only such purchases and incur only such costs as are essential and personally sign all orders in connection therewith.

(d) He/she must not pledge the credit of the official receiver.

(e)   He/she will be responsible for the payment of the wages and salaries of all employees and must obtain receipts for all such payments.

(f) When retaining or terminating the services of employees he/she must have regard to the potential liabilities of an employer and to the requirements of the Employment Protection Act 1975, Health and Safety at Work Act 1974 and all other relevant legislation.  

(g) Subject to any action already taken by the official receiver he/she must promptly effect all necessary insurances, e.g. fire, burglary, employees’ and public liability, the insurers being asked to note the interest of the official receiver in any current policies. The official receiver should personally satisfy himself/herself as to the adequacy of cover in the above matters and particularly that proper cover for himself/herself and the estate is held in respect of common law negligence and breaches of statutory duties.  

(h) His/her trading transactions must, so far as possible, be on a cash basis; goods should only be sold on credit if strictly necessary and then only on a short term basis to reputable customers.

(i) He/she must submit accounts for the approval of the official receiver [note 5 and note 6] (see paragraphs 32.4.46-48).


32.4.29 Public examination of director or company officer

Where the official receiver decides to call a public examination [note Insolvency Act  section 133 and section 290of the director, bankrupt or other appropriate party to assist him/her in his/her enquiries, the special manager may be called upon to ask questions of the examinee (see Chapter 14, paragraph 14.38 and 14.43).   If the special manager attendance is required at the public examination, he/she should be informed in writing at least 14 days prior to the hearing [note 7] (see paragraph 14.25).


[Back to Part 1 - Application for and appointment of special managers] [On to Part 3 - Security, supervision, and fees of special manager]