February 2012

PART 4

TERMINATION OF APPOINTMENT OF SPECIAL MANAGER 

32.4.50 Termination of appointment generally

The appointment of a special manager will cease in any of the following circumstances: 

1. By an order of the court following a report by the official receiver that the special manager had failed to give or keep up security [note 1 and note 2] (see paragraph 32.4.35).
2. Dismissal of the winding up or bankruptcy petition or discharge of the provisional liquidator or interim receiver without a winding up or bankruptcy order having been made [note 3 and 4].
3. On any date fixed by the court in the order of appointment or in any subsequent order [note 5 and 6].
4. On the making of a winding up or bankruptcy order (unless reappointed by the court, see paragraph 32.4.13).
5. By an order of the court following an application by the official receiver where he/she is of the opinion that the employment of the special manager is no longer necessary or profitable for the estate [note 7 and 8].
6. By order of the court, on application of the official receiver, following a resolution of creditors requesting that the appointment be terminated [note 9 and 10].  

32.4.51 Handing back of business

If the petition is dismissed or an order for the appointment of a provisional liquidator or interim receiver is discharged before a winding up or bankruptcy order is made, the appointment of the special manager is terminated [note 11 and 12].

For action to be taken when the petition is dismissed and the official receiver is provisional liquidator or interim receiver see paragraphs 2.140-2.142 and 2A.132-134.

32.4.52 Acts of special manager valid when winding up or bankruptcy petition subsequently dismissed

Any act or expense incurred by the special manager appointed by the court on application of a provisional liquidator or interim receiver prior to the hearing of the winding up or bankruptcy petition, will not be invalidated if the winding up or bankruptcy petition is subsequently dismissed.  This also applies to an act or expense incurred by the official receiver as provisional liquidator or interim receiver [note 13].

32.4.53 Termination of appointment when not necessary or profitable

If at any time the official receiver considers that the employment of a special manager is no longer necessary or cannot be financially sustained, he/she should seek the directions of the court as to termination of the appointment [note 14 and 15] and meanwhile instruct the special manager to keep further costs to a minimum. Such a position might occur where changed circumstances could result in detriment to the estate or where a third party refuses to extend an indemnity.

32.4.54 Termination of appointment at request of creditors

The creditors may pass a resolution requesting  the termination of the appointment of the special manager [note 16 and 17] (see Chapter 16 regarding requisitioned meetings generally).  On receipt of notice of such resolution, the official receiver must make application to the court for directions or for the termination of the appointment. The court should be requested to make a specific order for the discharge of the remuneration and costs of the special manager.

32.4.55 Termination of appointment at request of special manager

A special manager cannot directly apply to the court for the termination of his/her appointment but may, in writing, inform the official receiver of the desire to relinquish the appointment and the reasons for the decision. The official receiver must then immediately report the facts to the court and, if advisable, seek a replacement. The termination will not become effective until the court so directs.

32.4.56 Memorandum summary of receipts and payments

If the official receiver considers a summary of the receipts and payments covering the entire period of office of the special manager would help the administration of the estate, he/she may ask the special manager to provide this.  Any such summary will be of a ‘memorandum’ nature only and will not form part of the statutory accounts required of the special manager [note 18].  

32.4.57 Final remuneration and costs – where petition dismissed

Where a provisional liquidator or interim receiver has been appointed but the winding up or bankruptcy petition is dismissed the official receiver should request the court to make provision for the payment of his/her fees and costs, the remuneration and costs of the special manager and for the retention of certain assets for this purpose (see Chapter 2 for further information relating to provisional liquidators and Chapter 2A for information relating to interim receivers).

32.4.58 Final remuneration and costs – other circumstances

When the appointment of a special manager is terminated in other circumstances, then, unless the court orders otherwise, his/her costs and expenses will be paid out of the estate in the specified order of priority and the official receiver may retain sufficient cash or assets to discharge this obligation [note 19, note 20, note 21 and note 22] Where an insolvency practitioner is appointed liquidator or trustee, the fact that a special manager has been employed should be brought to his/her attention and information provided as to any outstanding liabilities for remuneration or expenses.   

[Back to Part 3 - Security, supervision and fees of special manager]