Part 8 Common notices to be issued and actions to be taken
January 2012
4.139 Banks and building societies – initial notice
The official receiver should notify the bankrupt's bank or building society as soon as practically possible (and certainly within five working days of the bankruptcy order). Further references in this part to banks also includes building societies. The official receiver should send the notice as soon as he/she obtains the bank's full address and account numbers. If the bank is informed promptly this may prevent any unauthorised withdrawal of funds by the bankrupt (see paragraph 4.141). A list of bank contact details is available here. The official receiver should inform Official Receiver’s Business Support (ORBS) if he/she has any problems with the contacts provided on the list.
4.140 Internet and telephone bank accounts
The official receiver should not ask for the bankrupt’s password, pin number or security information. The official receiver should not access, or attempt to access the account through the internet or by telephone.
There are two standard letters, BANK 1 and BANK 2, available to the official receiver. Which letter the official receiver sends will depend on the specific circumstances of the bankruptcy (see paragraphs 4.142 and 4.143).
The official receiver should send a BANK1 letter when he/she wishes to close the account. The BANK 1 template provides three options which cover the following circumstances:
The text of the letter cannot be edited, however, the official receiver may add additional paragraphs if appropriate to the bankruptcy.
The official receiver should send a BANK 2 letter where the official receiver agrees that the bankrupt, subject to the bank’s permission, can continue to operate the account. This is most likely to occur where the bankrupt’s regular income is paid into that account. The official receiver must choose one of BANK 1 template options:
The text of the letter cannot be edited, however, the official receiver may add additional paragraphs if appropriate to the bankruptcy.
4.144 Banks – dealing with credit balances
Where the bank holds a credit balance (after taking in account any right of set-off and monies required to fund essential living expenses, see paragraph 31.5.21) the official receiver should take a practical approach. The cost of the effort made should not be more than the amount realised. If the credit balance (or the sum of balances with one bank) is £50 or less, the ISCIS notice BANK 1 or BANK 2 should be sent asking for the balance to be paid to the official receiver. The notice should be followed up by a telephone call and no more than one further follow-up letter. Where the credit balance exceeds £50, the official receiver should use his/her discretion as to the effort required from his/her staff to collect the monies. Part 3 of Chapter 31.5 provides further information on the realisation of cash at bank.
4.145 National Savings Accounts
The official receiver should send notice to the Director of Savings where the bankrupt is known to hold premium bonds, savings certificates, savings bonds and/or a National Savings account. A full list of investment products may be found here. The notice NORD 1 should be sent to the address shown in Annex 1.
The official receiver should send notice to E-bay where the bankrupt is known to have an E-bay account. The address can be obtained by entering “EBay” as a Party Name in ISCIS. An E-bay account may be used to buy or sell household goods, however the level of transactions may show significant activity and indicate that a bankrupt may be trading. The official receiver should follow the advice given in Paragraph 4.144 when realising any credit balance.
The official receiver should send notice to Paypal Europe Limited where the bankrupt is known to have a Paypal account. The address can be obtained by entering “Paypal” as a Party Name in ISCIS. A bankrupt may use his/her Paypal account like a current bank account for receiving and making payments and it may be in credit. A trading bankrupt may operate a Paypal account to accept payment for goods and/or services provided. The official receiver should follow the advice given in Paragraph 4.144 when realising any credit balance.
The official receiver should send the initial notice of the bankruptcy order (MP2) to the mortgagee and any other charge-holders of property in which the bankrupt may have an interest. The notice will protect the official receiver’s interest in the property and he/she should make early enquiries into its value. The notice should still be sent where the property has been repossessed and not yet sold.
The official receiver should send ISCIS Word template form NLC to all loan creditors. The early receipt of the information requested by the form may assist the official receiver’s enquiries into the affairs of the bankrupt which may be helpful during the initial interview, if held.
4.150 Landlord – assured shorthold tenancies
Where the bankrupt resides in premises under an assured shorthold tenancy agreement, or in premises otherwise exempt, e.g. a tenancy with a local authority or registered social landlord, the agreement does not form part of his/her estate [Note 1]. For more information on assured shorthold tenancies see paragraph 30.70. Where the official receiver is satisfied that the rent is paid up to date, and the landlord is not a creditor in the proceedings, it is not necessary to send notice (NTL) to the landlord. Where the landlord is a creditor the official receiver should send the form NTL to him/her.
4.151 Landlord – other types of tenancies
Part 4 of Chapter 30 describes other types of tenancies not mentioned in paragraph 4.150. The official receiver should send notice (NTL) to the landlord of any premises rented or occupied by the bankrupt under these other types of tenancy. Where the landlord has obtained possession of the property or indicates that they will be levying distress the official receiver should refer to Part 1 of Chapter 9.
4.152 Landlord - leasehold property
Where the bankrupt’s premises are held on a lease the official receiver should obtain sufficient information from the landlord and the bankrupt to enable him/her to decide whether the lease is of any value to the estate. The official receiver may then decide to disclaim his/her interest in the lease or may require a further valuation prior to its sale. Further guidance on dealing with leasehold property can be found in Part 5 of Chapter 31.3 and Case Help Manual part, Leases with value.
4.153 Landlord – collection of accounting records
The official receiver should make arrangements with the landlord for the collection of the bankrupt’s accounting records or other papers within 10 days of the making of the bankruptcy order. Part 2 of Chapter 10 provides further guidance on obtaining custody of the accounting records.
The bankrupt may have an interest in a life policy, or other policy issued by an assurance company. Where a bankrupt has such an interest the official receiver the official receiver should send the form NTASS to the relevant assurance companies. Further information can be found in Chapter 49.
The official receiver should send a notice to all relevant local authorities where the bankrupt is responsible for the payment of council tax or business rates on any premises. Further information on council tax may be found in paragraph 40.5. The notice should quote the address(es) of the premises together with the reference number(s) if known. Where the bankrupt no longer occupies business premises the local authority should be informed as it may be the case that no further business rates may be incurred. If the bankrupt owns or leases the premises there may still be a liability for business rates even if the property is unoccupied.
4.155a Premises licensed to sell alcohol – local authority
The official receiver should inform the relevant local authority as soon as possible of the insolvency of a premises licence holder (see paragraph 59.81).
Details of the dedicated email address and telephone number for licensing notifications can be located on the web site of the relevant local authority.
Notice to the water companies is usually included in the standard notices package used by official receivers. In some areas there may be two water companies operating, one for the supply of fresh water, the other removes and treats waste water. The official receiver should issue a notice to appropriate water supply companies as soon as the relevant information (such as account numbers and/or addresses) becomes available. The contact details of water supply companies in the UK are available here.
4.157 Utilities other than water services - general
Utilities such as electricity, gas and telephone are provided by private companies and in many areas of the country there will be multiple service providers. In the initial stages of the bankruptcy the official receiver may have difficulty identifying the bankrupt’s supplier.
4.158 Utilities other than water services – notice not normally required
There is no reason why the official receiver should treat the utility companies differently to other trade creditors. In general these companies should receive notification of the order when the report to creditors and meeting/no meeting notice are issued. However, there may be special circumstances, such as the continuation of a business or where information is required for the official receiver’s enquiries, when early contact with the supplier is necessary.
The official receiver should send notice to the secretary of any company in which the bankrupt is believed to be a shareholder. The notification is necessary to prevent the registration of any transfer of shares.
The bankrupt’s solicitors should be sent the form NORD2 which asks, amongst other things, for details of all matters in which they have acted in the last three years together with any books, documents, papers, etc. in their possession relating to the bankrupt’s affairs. Arrangements should be made for the delivery or collection of any accounting records or other papers within 10 working days of the order. The official receiver should issue a receipt to the solicitors. See Chapter 10 for further information on dealing with the bankrupt’s records and papers.
4.161 Solicitors - lien unenforceable re records
If the bankrupt’s solicitors attempt to claim a lien on the company’s records, it is unenforceable and reference should be made to paragraph 9.109 and Chapter 10, Part 7. For information and advice on steps to take if a solicitor fails to co-operate with the official receiver’s enquiries, please see Chapter 13, Part 2 and Chapter 64.
4.162 Bankruptcy order made against a solicitor
Where a bankruptcy order is made against a solicitor see paragraph 4.185 and paragraphs 59.87 to 59.94.
Where the bankrupt has any current insurance cover, for example fire, motor or other insurance, the official receiver should write to each insurance company and/or insurance brokers asking them to provide details of the existing insurance cover, quoting, when known, policy numbers. Further information can be found in Chapter 49 and in particular paragraph 49.20.
4.164 Third party owners – items on lease, hire, hire-purchase, etc.
The official receiver should send notice to the owners of any goods or property held by the bankrupt on hire, hire-purchase (ISCIS Word template form NHP.bpy), lease, on loan, for safety custody, for repair or otherwise, including suppliers of stock/goods where retention of title is claimed. The official receiver should follow the policy outlined in paragraphs 31.6.52 and 31.6.53 when dealing with third party goods.
4.165 Third parties holding the bankrupt’s property
The official receiver should send notice to any person holding or thought to be holding any property belonging to the bankrupt (including assignees of book debts or any other assets) to prevent assets being disposed of. If the assets are believed to be in jeopardy, they should be promptly collected. Where the bankrupt’s property is held by a pawnbroker reference should be made to paragraphs 31.0.47a to 31.0.47h.
4.166 Accountants – notice and collection of records
The bankrupt’s accountants should be sent the form NORD2 which asks, amongst other things, for a copy of the last set of accounts and details of all books, documents, papers, etc. in their possession. Arrangements should be made for the delivery or collection of any accounting records, statutory books or other papers within 10 working days of the order. The official receiver should issue a receipt to the accountants. See Chapter 10 for further information on dealing with the bankrupt’s accounting records.
4.167 Accountants - lien unenforceable re records
If the accountants attempt to claim a lien on the company’s records, it is unenforceable and reference should be made to paragraph 9.109 and Chapter 10, Part 7. For information and advice on steps to take if an accountant fails to co-operate with the official receiver’s enquiries accountant, please see Chapter 13, Part 2 and Chapter 64.
4.168 Bankruptcy order made against an accountant
Where a bankruptcy order is made against an accountant see paragraph 4.187 and paragraphs 59.33 to 59.39.
4.169 Credit card companies – trading bankrupt
The official receiver should send a notice to all credit/charge card companies where a trading bankrupt holds an account. It is important to give immediate notice where the company operated a facility for acceptance of payment by credit/charge card for his/her goods or services. The official receiver should try to obtain the account numbers from the bankrupt or the bankrupt’s records before sending the notice. Generally credit or charge card companies will be unable to trace an account without the account number(s). Any such notice is likely to be returned requesting the account number.
The official receiver should send notice to any trade suppliers to stop any delivery of goods to the bankrupt.
Where a bankrupt has book debts at the date of the bankruptcy order, which are not subject to a charge (see paragraph 4.172), the official receiver should instruct his agent "the contractor" (see paragraph 31.1.4) to realise the book debts on his/her behalf. As the chance of recovering a book debt diminishes with time the contractor should be instructed as soon as possible even where an insolvency practitioner is likely to be appointed trustee at the first meeting of creditors. Chapter 31.1 provides detailed guidance on book debts.
4.172 Book debts – bankrupt continues to trade
The official receiver should be aware that in some cases the bankrupt may continue trading, for example, a jobbing joiner. In these instances the official receiver should instruct the contractor to collect the book debts to prevent the trade debtors making payment to the bankrupt. Where the book debts are secured (see paragraph 4.173) the official receiver should draw the attention of the charge-holder to the continued trading of the bankrupt.
Where any book debts of the bankrupt are subject to a charge the official receiver should make early contact with the charge-holder and should establish who will protect and collect the book debts. In the event that the charge-holder refuses to collect the book debts the official receiver will instruct the contractor to collect them as per the instructions in paragraph 31.1.46. Where there is an assignment of book debts or a factoring agreement, reference should be made to Chapter 31.1 generally and in particular Part 5.
Where the bankrupt has employees the official receiver will generally terminate employment with effect from the date of the order. The official receiver should consider the guidance given in respect of employees where a winding-up order has been made in paragraph 62.20 where he/she decides to continue the bankrupt’s business. Any decision to continue the bankrupt’s business should have been made after considering the matters in paragraph 24.57. Every employee who may have a claim for wages, holiday pay, payment in lieu of notice etc., and/or a redundancy payment should be sent the standard notice ISCIS Word template form EMPLET. Additional information can be found in Chapter 8, Chapter 76 and the Redundancy Payments Manual.
A trading bankrupt against whom a bankruptcy order is made may operate an occupational pension scheme for the benefit of employees. The official receiver has a statutory duty to send notice of an 'insolvency event' to The Pension Protection Fund (see paragraph 4.177), The Pensions Regulator (see paragraph 4.178) and the pension scheme trustees and/or managers (see paragraph 4.179) [Note 3]. Chapter 61 provides further advice on pension schemes. The notice is referred to as a 'section 120 notice'. The proforma form, entitled Section 120 Insolvency Event Notice, is available here. Whilst this is only a suggested pro forma form the official receiver should use it where possible.
4.176 What is an ‘insolvency event’?
An ‘insolvency event’ with regard to bankrupts is defined in sections 121(2) of the Pensions Act 2004. The ‘insolvency events’, in addition to the making of a bankruptcy order, of which the official receiver is required to provide notification to the relevant bodies are as follows;
The appointment of an interim trustee is not an insolvency event and notification will only be required if a bankruptcy order is eventually made. The change of an office-holder in the same procedure, such as the handing over of a case to an insolvency practitioner, does not need to be notified.
4.177 The Pension Protection Fund
The official receiver is required to give notice to The Pension Protection Fund within 14 days of the ‘insolvency event’, or, after this time limit, within 14 days of becoming aware of the pension scheme. The address of The Pension Protection Fund is Knollys House, 17 Addiscombe Road, Croydon, Surrey, CR0 6SR. Their telephone number is 0845 600 2541. Their e-mail address is information@ppf.gsi.gov.uk. Further details about The Pension Protection Fund can be found here.
The official receiver should send notice to The Pensions Regulator at the same time to The Pensions Regulator, whose address is Napier House, Trafalgar Place, Brighton, BN1 4DW. Their telephone number is 0870 6063636 and their fax number 0870 2411144. Their e-mail address is customersupport@thepensionsregulator.gov.uk. Further information about The Pensions Regulator can be found here.
4.179 The pension scheme trustees or managers
The official receiver should also send notice to the pension scheme trustees or managers. This information may be supplied by the bankrupt, his/her accountants, solicitors or found in his/her records.
4.180 Contact with Crown Departments
The Insolvency Service has a dedicated intranet page dealing with contact with Crown Departments. This page includes the partnership agreement with HMRC amongst other matters and can be viewed here.
4.181 HM Revenue & Customs – Tax and National Insurance
The Insolvency Claims Handling Unit of the HM Revenue & Customs (HMRC) deal with claims in insolvency proceedings in respect of tax and National Insurance. The official receiver should ensure that the bankrupt’s case name is entered onto ISCIS as quickly and accurately as possible. This information is automatically extracted from ISCIS and sent to the Insolvency Claims Handling Unit at Longbenton. A paper copy of this information is not necessary. Further information on direct taxation is provided in Chapter 77.
4.182 HM Revenue & Customs – VAT
(Amended September 2012)
In the every case where the bankrupt is registered for VAT the official receiver should complete HMRC form “VAT 769” as soon as possible after the making of the bankruptcy order. In completing the form the official receiver should indicate whether deregistration is appropriate. Where it is not known at the initial stage of a case whether VAT de-registration will be appropriate, the VAT769 should be completed but the relevant box on the form should not be ticked. A second VAT769 should not be submitted as HMRC automatically issue a de-registration enquiry form VAT167 when notified of the insolvency. If the VAT167 is not completed and returned HMRC will issue a final reminder VAT168. Both the VAT167 and VAT168 forms contain a box to be ticked requesting that the company not be de-registered. The form “VAT 769” should not be sent until the official receiver can answer questions 1 to 6. If the VAT number is not provided HMRC will return the form. The complete form VAT769 should be sent to insolvencyhelpdesk@hmrc.gsi.gov.uk. Further information on VAT is provided in Chapter 78.
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