In any insolvency in which goods have been or may be recovered, the official receiver should make enquiries to ensure that the goods are not subject to a clause. In the absence of the director(s) or bankrupt, the official receiver should where possible examine the contractual documentation (eg sales invoices) relating to the goods. If the official receiver’s enquiries do not reveal the existence of any retention of title clause, and he has no reason to suspect that one might exist, he can assume that the goods are the insolvent’s property. If a supplier contacts the official receiver to claim goods on the insolvent’s premises, the official receiver should ask him to substantiate his claim, but if the official receiver is aware of information (not provided by the supplier) which confirms the validity of the claim, the official receiver should accept it and make arrangements for the supplier to collect the goods. The enquiries which the official receiver should make before accepting a claim to goods or the proceeds of their sale are outlined in the remainder of this Part of the chapter and paragraph 63.13 provides a summary of the specific matters to be considered in determining the validity of a supplier’s claim.Notes: PIQC and INSREP or PIQB PIQ(DP) and INSREP
Where the official receiver is put on notice of a claim to goods or moneys under his control, he should try to resolve the matter as quickly as possible. It is not necessary to await the appointment of an insolvency practitioner as liquidator or trustee before deciding on the validity of a claim, although the official receiver may prefer to do so if, for example, the value of the goods is substantial and there are no difficulties associated with the storage of the items. However, if the supplier can clearly establish his rights to the goods, failure to hand them over might lead the official receiver to incur a liability under the Torts (Interference with Goods) Act 1977. In cases where the official receiver is in doubt about a specific aspect of a supplier’s claim, he may consult Technical Section at HQ London by minute. Claims by different suppliers within the same insolvency should be considered separately and the official receiver should ensure that property subject to a claim is protected. In this respect reference should be made to Part 7 of chapter 8, which discusses third party property generally. When considering insurance of the goods, the official receiver should remember that the risk passes with the ownership of the goods unless there is a contrary agreement between the parties.
Since the onus is on the supplier to prove his claim, the official receiver should attempt at an early stage to clarify the matters referred to in paragraph 63.13 (and explained in more detail elsewhere) to enable him to decide on the validity of the claim to goods or monies. It may be appropriate to send a questionnaire to the supplier (see paragraph 63.9). The information provided by the supplier should be checked with the insolvent’s records (see also paragraph 63.11).
The official receiver may obtain the information he requires by requesting the supplier to complete and return the questionnaire in Annex 1 to this chapter. The questionnaire is intended to assist the official receiver and so can be amended to obtain the information appropriate for the insolvency concerned. The official receiver may send the questionnaire with a letter which, to avoid a response that some of the information is already with the official receiver or in the insolvent’s records, should explain that it would be useful if all of the documents and information requested could be supplied so that a comprehensive summary of the claim is available. It may be considered desirable to give the supplier a fixed time in which to respond, especially where goods remain on the insolvent’s premises or are in storage, to obtain a prompt response. Whilst this may put pressure upon the supplier to respond it should not be assumed that no response means the supplier has no claim.
At an early stage in the proceedings the official receiver should seek the views of the director(s) or the bankrupt as to whether any supplier has a valid claim to goods or monies under the official receiver’s control. In addition their comments should be sought on when the supplier informed the insolvent of the clause, whether the director(s) or bankrupt accepted the clause and details of the date of supply of the goods relating to the claim. However, even if the director(s) or bankrupt are unaware of the existence of the clause, the supplier’s claim may still be valid (see paragraph 63.15). The official receiver may also wish to seek the assistance of the director(s) or bankrupt in identifying the goods which are subject to the claim. Any statement of affairs submitted should also show details of the assets which the director(s) or bankrupt consider are subject to claims by suppliers.Notes: [Forms 4.17; 6.28 or 6.33]
Whenever possible the official receiver should identify any documentation relating to the supplier from amongst the insolvent’s records. It may be that an examination of the main documents will allow the official receiver to dismiss the supplier’s claim without the need for detailed correspondence with the supplier, perhaps on the basis that the clause has not been incorporated into the contract. Apart from the accounting records, eg copy order forms, order confirmation notes and invoices, a supplier’s catalogue or price list and any correspondence between the insolvent and the supplier may provide useful information.
Where the official receiver has seized goods as the property of the insolvent and subsequently becomes aware of a possible claim, he should not sell the goods before deciding upon the validity of the claim. The official receiver must be completely satisfied that the claim is invalid before disposal of the goods takes place. If the official receiver were to sell goods subject to a clause, he could be liable in damages to the supplier. The statutory protection would not be available to the official receiver if the goods were sold. If the official receiver accepts the claim, the goods should be returned to the supplier as quickly as possible, but he must pay any costs incurred by the official receiver in relation to the seizure. Where the official receiver becomes aware of a clause after the goods have been sold, he should, once satisfied that the claim is valid, pass the net proceeds of sale to the supplier which will be the total amount to which the supplier is entitled in these circumstances.
Notes: [s234(3) and (4); s287(4) and 304(3)]