OTHER MATTERS TO BE DEALT WITH DURING INSPECTION
This part deals with circumstances that may be encountered in certain circumstances only. Wherever an inspecting officer is in doubt or difficulty concerning any matter, he/she should contact the assistant official receiver or, failing that, the official receiver, by telephone to seek guidance.
The inspecting officer should ascertain whether an insolvent has a web site on the internet to either advertise or sell products/services. The inspecting officer should obtain details of the internet service provider (ISP), the web site address (also known as the domain name), account numbers and any password used by the insolvent. Details of any web site address are likely to be found on any advertising material produced by the company/bankrupt or any letterhead paper. It is important that any business web site is closed as soon as possible after the making of a winding-up or bankruptcy order, particularly if products can be ordered via the web site and if the site is receiving emails.
A registration certificate is issued by the internet service provider in respect of each domain name registered. This certificate should verify proper registration to a named person. The official receiver should endeavour to recover this certificate from the insolvent’s records and if this certificate cannot be found, enquiries should be made from the relevant internet service provided. The ownership of a domain name may be established by reference to the web-site www.who.is (see also paragraph 31.10.93 to 31.10.98).
The official receiver should contact the ISP immediately and request that the site be closed or, alternatively, request that a notice is placed on the web site providing details of the date of the relevant insolvency order and the name, address and telephone number of the official receiver. Where a company is being wound up, all of its websites must contain a statement to that effect [note 1]. The standard administration fee covers any charge made by the ISP for this service; see Chapter 36.
If a company does not have a web site but has an email facility, the inspecting officer should ascertain details of any email address(es) and arrangements should be made with the ISP to either cancel the email address or set up some form of out of office assistant providing details of the date of the relevant insolvency order and the name, address and telephone number of the official receiver. The ISP can usually be identified from the email address.
If the insolvent is a bankrupt the official receiver should take no steps to redirect the bankrupt’s email. If the bankrupt is present and is co-operating with the inspecting officer he/she may be prepared to allow the inspecting officer to view any current business e-mails or e-mails stored on the system.
There is currently no legislation governing the operation of ISPs. The terms and conditions of some ISPs state that when a person becomes insolvent the ISP owns all the data on the website. Information and advice regarding the valuation and sale of domain names in given in Chapter 31.10, paragraph 31.10.93 to 31.10.98 - Sundry Assets.
(Amended April 2010)
If the inspecting officer becomes aware that the insolvent maintained a retailers’ account with a bank for the processing of credit or debit card transactions, details should be obtained so that the bank can be notified of the winding-up or bankruptcy order (see http://intranet/OROS/CaseMngment/Banks/BanksHome.htm for details of the major banks concerned). In addition, the inspecting officer should take an inventory of all chip and PIN devices as soon as practically possible and lock them away securely. Once in possession of the devices the official receiver should contact the relevant processing bank (usually identified on the device) and ask for their advice as to what to do with the equipment. Under no circumstances should these items be sold to third parties.
If a retailer still possesses the old style metal imprinting plate credit card machine, used when processing credit and debit card vouchers, either the metal plate or if this cannot be separated, the whole machine should also be recovered and dealt with in the same fashion.
The document exchange (DX) service is a delivery of business to business mail for professionals in the following industry sectors: legal and judiciary, financial services, retail finance, property and construction, government, health, utilities, optical and commercial. The Service is run by DX Network Services Ltd and operates via a network of local collection and delivery points known as 'exchanges'. Members post their mail into the nearest exchange and collect mail the following morning. An exchange may have a single user or a number of different users.
An inspecting officer should ascertain whether an insolvent has a DX address and obtain relevant details. If the insolvent has a DX address, they will hold a key to a lockable box in their exchange. The official receiver can search to see if an insolvent has a DX address by typing in a postcode or company/trading name onto the search facility on the DX website http://www.thedx.co.uk/
Where the insolvent is a company, the official receiver should take possession of the key to the lockable box and ensure the box is emptied of mail. Arrangements should be made as soon as possible for the insolvent company's DX box to be closed and the DX service cancelled. A request should also be made for any post to be redirected to the official receiver via the DX system. DX will redirect post free of charge for one month. The official receiver should telephone DX Network Services Ltd to ascertain who the account manager is for the company in question, and then send the request in writing to that person, enclosing a copy of the winding-up order. The contact details for DX are provided at paragraph 8.79.
In a bankruptcy case arrangements should be made for the DX service to be terminated immediately. A request should be made that any post sent to the insolvents DX address should be returned to sender. The official receiver should telephone DX Network Services Ltd to ascertain who the account manager is for the business in question, and then send the request in writing to that person, enclosing a copy of the bankruptcy order. The contact details for DX are provided at paragraph 8.79.
DX Network Services Limited
Telephone number: 01753 630 630
FAX: 01753 631 631
DX: DX1 IVER
If the insolvent is owner or lessee of any motor vehicle, it should be locked and, if possible, parked off the road, preferably in a garage, or similar. If a vehicle is left on a public highway, it must be taxed and insured (refer to Chapter 49 regarding insurance). In any event it should not be driven, except by the official receiver’s agents in the course of disposal. In no circumstances should a member of the official receiver's staff drive a vehicle without adequate insurance cover and the express permission of his/her senior officer. Such an occurrence should be a rare event, e.g. where essential to safeguard the asset.
If the official receiver is satisfied that a bankrupt needs a vehicle for use in his/her current employment, business or vocation, and it is not of excess value, he/she should be permitted to retain it as exempt property (see Chapter 30, Part 6).
Further information with regard to motor vehicles may be found at Chapter 31.2.
Where the insolvent holds birds, fish or animals intended for sale, the inspecting officer should take an inventory of them and ensure that they are securely contained. If such creatures are not to be sold immediately, the official receiver should ensure that they will be fed and cared for until a sale can take place. Where necessary the official receiver may buy feeding stock and employ a manager (which may be the bankrupt or a company officer) to maintain the creatures until sale (see also paragraph 32.3.46 on employing a manager). Consideration needs to be given to the practicalities and costs associated with caring for any animals pending a sale. If the costs associated with looking after any animals pending a sale are likely to result in no benefit to the estate, then the animals should be dealt with immediately. If the official receiver decides that the creatures do not have a realisable value, he/she should contact a reputable animal or wildlife organisation, such as the Royal Society for the Prevention of Cruelty to Animals, to arrange for their disposal. A bankrupt’s pets will not usually have a realisable value but where they are valuable, the official receiver should sell them. Such a sale may be to a relative or friend of the bankrupt; provided the official receiver is satisfied that he/she has obtained the market value of the pet.
Reference should also be made to the following paragraphs:
Livestock - paragraph 31.6.40
Pedigree pets - paragraph 31.6.58
Vets - paragraph 59.100
If any animal appears likely to be dangerous, consideration should be given to its immediate disposal with the assistance of the appropriate organisation. The keeper of an animal will be strictly liable for any damage caused by that animal if the animal belongs to a dangerous species (i.e. one not usually found domesticated in Britain) and also, in certain circumstances, for damage caused by an animal which is not of a dangerous species [note 2]. A keeper is the person who owns or is in possession of the animal. The official receiver will, as trustee, own the insolvent’s animals, and could, as receiver and manager or liquidator, be considered to be in possession of such animals.
European legislation provides that a person who sells or offers for human consumption any food, which fails to comply with food safety requirements, shall be guilty of an offence [note 3]. The inspecting officer should under no circumstances consider the sale of perishable food e.g. meat, milk, sandwiches, fruit and vegetables. The inspecting officer should arrange for the disposal of the food with the assistance of the local authority if necessary. Any frozen food should also be disposed of in the same manner, as the official receiver is unable to verify its storage history. Further information may be found at paragraph 31.6.52 - fresh food, 31.6.56 - grocery items and 31.6.45 - milk.
If the inspecting officer encounters firearms or explosives during an inspection, he/she should not touch or move them and should immediately contact the police for advice, particularly if the circumstances are suspicious. The police will be able to confirm whether a firearm is registered and whether its owner holds other registered guns. Firearms should only be transported by the police or a licensed gun dealer, and likewise explosives would only be moved under the supervision of the police or other competent authority (see paragraphs 3.71 and 4.88). There are numerous regulations relating to the storage, transportation and sale of firearms and explosives and the official receiver should consider the early employment of a specialist agent.
Further information can be found as follows:
Explosives – paragraph 31.6.32
Firearms – paragraph 31.6.67
Offensive weapons – paragraph 31.6.68
If the insolvent is trading as a public house, the inspecting officer should immediately verify whether the public house is a tied house and obtain a copy of any tenancy agreement. If so, the brewery should be informed of the winding-up or bankruptcy order immediately. In such circumstances it is the responsibility of the brewery to either appoint a new manager or to close the premises.
If the public house is a free house, it is likely that the alcohol and soft drinks have been supplied on a sale or return basis. The inspecting officer should ascertain details of the supplier who should be notified as soon as possible. Further information on dealing with a public house are included at paragraph 59.81 to 59.85, 31.6.54 to 57 and 31.6.54. Reference should also be made to parargraph 31.3.365 regarding relief from forfeiture where the public house is owned on a lease basis.
Where the insolvent is trading as a petrol station the inspecting officer should immediately ascertain whether the petrol station is held on a tenancy agreement. If so, the landlord should be informed immediately of the winding-up or bankruptcy order as it is likely to be his/her responsibility to either appoint a new manager or to close the premises.
Where the petrol station is independently owned by the insolvent the official receiver should establish as soon as possible whether the tanks in the petrol station are full or empty. Details of the supplier should be obtained and arrangements made for the tanks to be emptied. The official receiver should be aware that the emptying of tanks is not sufficient to deal with the fire risk. The petrol station and tanks will still contain fumes. Where the official receiver is unable to return a lease or deal with the premises immediately, specialist advice should be sought as to how best to deal with the premises to eliminate any fire risk. Initially contact, is likely to be made with the official receiver’s agents.
Insurance cover under the Willis Insurance Scheme will only be provided if all aspects of the Code of Practice for unoccupied premises are implemented, and the local fire officer is contacted for guidance on securing the tanks. See Chapter 49, Annex 1 and Annex 3 for more information.
When the official receiver becomes aware that a company in liquidation has dealt with Ministry of Defence (MoD) contracts, then it is possible that they hold classified or secret information. If this is the case they will have been inspected and approved by the MoD, and the location of the premises (sites) used by these companies are referred to as “List X”. Special treatment needs to be used when dealing with these companies to safe guard the classified or secret information, which will remain in the possession of the MoD. Please refer to Chapter 59, paragraph 59.76A to 59.76P for further information.
Where a gas bottle containing oxy acetylene is discovered on an insolvent's premises (usually premises where welding has been carried out) immediate action should be taken to establish whether the bottle is empty or contains gas. This information is only likely to be available if the insolvent is available to provide all relevant details. Where the official receiver is unable to verify if the bottle is empty, or where the bottle still contains gas, immediate arrangements should be made to contact the supplier to have the bottle removed from the premises due to the fire risk it presents. The gas bottle should have a label fixed to it indicating the supplier.
An inspecting officer may find drugs at a variety of premises including the premises of doctors, dentists, veterinary surgeons, private clinics and residential care homes. In addition, postal carriers, or a person collecting drugs on prescription for another may be in possession of drugs. Such drugs may be identified in the register that is required to be kept (see paragraph 8.89d).
The guidance in the following paragraphs concentrates on controlled drugs, as it is to these drugs that criminal penalties apply where they are illegally possessed or stored. A list of the commonly encountered controlled drugs is provided by the Home Office (http://www.homeoffice.gov.uk/publications/alcohol-drugs/drugs/drug-licences/controlled-drugs-list).
There are separate restrictions on the sale of medicines not subject to control, and guidance on this is covered in paragraphs 31.6.23 to 31.6.26 of Chapter 31.6.
Where it appears that controlled drugs (see paragraph 8.89) encountered on an inspection are being held illegally, the police should be informed immediately. Under no circumstances should the drugs be moved or otherwise handled by official receiver’s staff.
Similarly, the encountering of certain legally controlled drugs (see paragraph 8.89b) should also be reported to the police.
A list of police Controlled Drugs Liaison Officers (CDLOs) is available here http://www.vmd.defra.gov.uk/pdf/CDLO.pdf.
Many drugs are simply illegal to possess, produce or supply [note 4] except in very limited circumstances.
The legislation [note 5] provides that certain ‘banned’ drugs can be legally produced, possessed and/or supplied in certain circumstances and by certain professionals [note 6]. Under the legislation, controlled drugs are divided into five categories (schedules) depending on their usefulness and potential for misuse:
The legislation [note 13] provides that certain drugs (primarily those in schedules 1 and 2 – see paragraph 8.89b), are stored securely. For the reasons given in paragraph 8.89b, the official receiver is most likely to encounter such storage when dealing with drugs in schedule 2.
The relevant regulations specify the standard to be met in some detail [note 14], but essentially they require the cabinet in which the drugs are stored to be made of steel, with good locks, and to be bolted to either the floor or a wall.
All persons who possess and supply controlled drugs in schedules 1 and 2 are required to keep a register relating to the drugs, to show transactions relating to the drugs. The register is required to be broken down by drug stored and records must be kept chronologically. The register must be available for inspection at the premises on which the goods are stored at all times [note 15] [note 16].
The record keeping requirements for drugs in schedules 3 and 4 are limited to those imported or exported [note 17].
The records must be kept for at least two years [note 18].
Guidance on dealing with controlled drugs is given in paragraphs 31.6.27 to 31.6.31. Suffice to say, it is likely that the official receiver, as liquidator or trustee, will find it necessary to issue a disclaimer of the drugs, served on the relevant drug control authorities.
The official receiver is under a duty of care imposed by environmental legislation to ensure that waste is dealt with in the correct way. It is a criminal offence to keep or dispose of 'controlled waste', i.e. waste from households, commerce or industry, in a manner likely to cause pollution of the environment or harm to human health. In all cases the official receiver must take prompt action to deal with the waste. Accordingly, where an inspecting officer finds that the insolvent has created waste to which the duty of care applies, he/she should obtain details of its nature and location and inspect it (where it is safe to do so) to establish whether it poses any immediate threat to the environment or to human health. The inspecting officer should not put him/herself in a position of danger by handling any dangerous substances and in the first instance assistance should be sought from the Environment Agency or a local environmental health officer. The inspecting officer may seek advice from the local authority responsible for waste collection in a particular area as to whether a particular waste may or will be collected by the authority as part of its normal public waste collection.
Guidance on the action required by the official receiver in relation to waste can be found in Chapter 82 - Environmental Legislation.